The London Crackdown

Business Week

Insider trading and other types of financial fraud are among the toughest crimes to detect and prosecute. But Britain's market regulators are turning up the heat

It's the £30bn industry that has prospered like no other during the recession – but nobody champions its success. Those working in it operate across all sectors, from public to private, with little regard for the consequences of their actions. They might work near you in the office or they might be the bloke you say hello to down the pub. You might be sitting next to one now.

They are Britain's fraudsters: difficult to detect, almost impossible to put behind bars. But last week the big crackdown that has long been promised by the UK's authorities began.

Dawn raids by the Financial Services Authority (FSA) and the Serious Organised Crime Agency (Soca) saw seven arrests in the Square Mile, with employees from some of the City's most august firms, including Deutsche Bank (DB) and BNP Paribas (BNPQY), as well as hedge fund Moore Capital, being collared. The arrests for insider trading were the culmination of an investigation that started in 2007. In one swoop, on Tuesday morning, the FSA gathered together 143 staff and, with officers from Soca, raided the homes of the suspects – arresting one at an airport – and took them for questioning. Most of the alleged suspects are now on bail or waiting to be released.

A few weeks ago, after a four-year investigation by the FSA, Malcolm Calvert, a former partner at Cazenove, that most blue-blooded of banks, was sentenced to nearly two years in jail for his part in an insider-trading scam that netted him more than £100,000.

Across from the City, London's Serious Fraud Office (SFO), much maligned for some high-profile failures in the past, scored its own successes.

Last week the agency launched one of its biggest operations in years – more than 100 SFO officials and 40 police were involved – with the arrest of three directors of Alstom (ALSMY), the engineering company, for price-fixing.

And two weeks ago, the SFO struck a notable blow when it forced Innospec Limited, a British subsidiary of an American chemicals firm, to pay more than $12m (£8m) in fines after it admitted paying bribes to win deals.

But it's the launch of the most high-profile City insider-dealing raid in years that has really captured the imagination. "There has always been a belief among people who work and police the City that insider trading remains rife," says Tim Harvey, a former City of London fraud investigator and now director of UK operations at the Association of Certified Fraud Examiners (ACFE). "But it is so difficult to get successful convictions for insider dealing. Indeed, with increased sophistication, I think it's probably more difficult than it has ever been." He adds: "Given the huge splash the FSA and Soca have made with these arrests, using so many officers, I really hope they get a result – because, if they don't, it'll set investigations in this area back many years."

Insider dealing became a criminal offence only in 1980, a year after Baroness Thatcher came to power.

The wave of privatisations and new levels of share ownership that she forced through in the following years necessitated a cleaning up of the trading system, where dealing on the inside was endemic.

Assessments of the extent of insider dealing since have been few and far between, although a paper from the FSA in 2006 did seek to "measure market cleanliness". It estimated that between 24 to 32 per cent of takeover bids in the UK during the early part of the Noughties involved insider dealing to significantly move the target's share price.

The laws governing insider dealing have been refined a number of times since 1980, most recently taking into account a 2003 EU directive.

But despite the deterrent – insider dealing carries a maximum sentence of seven years – the number of successful prosecutions remains low.

According to data compiled by Professor Paul Barnes from Nottingham Trent University, there have been just 22 successful criminal cases for insider dealing. Only two so-called "rings of City professionals" have been unearthed and received criminal sanction since 1980.

Since 2000, the FSA has also brought 15 successful civil actions for market abuse – 10 of which directly relate to insider dealing.

Barnes says: "If last week's arrests of a so-called 'insider-trading ring' across firms proves to be successful, then it will be quite remarkable. This is a biggie. The rings that have been caught in the past were quite small."

According to Barnes, the largest incident of a ring being caught was in 2003 with the case of Spearman, Smith and Payne. This involved a proofreader at a firm of commercial printers, who used his access to draft prospectuses and offer documents to profit from price changes in 27 takeovers and merger deals. The ring netted the perpetrators more than £300,000 although none actually worked in the Square Mile.

"Although I wasn't allowed to listen to the evidence directly, I gather that the case made extensive use of phone taps, something that has probably played a part in these latest arrests," says Barnes.

Alongside phone taps, the authorities now have a much larger arsenal of weapons to deploy and a much more sophisticated system by which to track suspicious movements in share prices, which often acts as the catalyst for investigations.

A few years ago, the FSA installed Sabre, a powerful – and expensive – computer system which analyses suspicious trading patterns in stocks.

The regulator is also making greater use of whistleblowers who, under new legislation, are granted immunity from prosecution if they testify against ringleaders guilty of crimes.

Praise has also been heaped on Margaret Cole, head of enforcement and crime at the FSA, for her determination to carry out the crackdown. One report described her as "an Eliot Ness for the 21st-century City of London"

The Cambridge-educated Cole – who completed her A-Levels two years earlier than normal – has an enviable CV, having played influential roles as one of the lawyers in the collapse of BCCI and having acted for pensioners looking for recompense from Robert Maxwell.

"Margaret Cole has been very vocal in promising to go after people, and she is undeniably good," says the ACFE's Harvey. "But I think Philip Robinson [a former director of financial crime at the FSA] should take some of the plaudits, too."

If reports are to be believed, a wave of further arrests are planned this week, with as many as 11 people likely to be charged over an insider-trading scam hatched at a printers in north London. Project Saturn, the moniker given to the raids, is certainly likely to further enhance the reputation of Cole and her colleagues at the FSA.

It seems that the great City crackdown has only just begun.

S&P Cuts Cement Producer Texas Industries' Ratings

Business Week

Standard & Poor's Ratings Services on Thursday lowered its corporate credit rating on cement producer Texas Industries Inc. deeper into junk status, citing declining demand for cement and falling prices.

S&P also noted that the concrete services company is heavily reliant on Texas and California for a majority of sales, with the latter still in the throes of a severe housing downturn. As business weakens, the company will be squeezed more by its high debt load, S&P said.

The credit ratings agency lowered the company's rating to "B" from "B+." The rating indicates that while Texas Industries currently can cover its financial obligations, adverse business conditions will likely hurt that ability.

S&P's rating on Texas Industries' $550 million senior notes due 2013 was lowered to "B" from "B+" as well. The company's recovery rating stayed at "4," which means debt holders can expect to recoup 30 percent to 50 percent of what they loaned to Texas Industries if it defaults on payment.

The ratings outlook remained at "Stable" because the company has sufficient capital to fund its operations and make debt payments over the next 12 months, S&P said. A "Stable" rating means that ratings likely won't change in six months to two years.

But S&P warned that that if commercial construction deteriorates more than expected and spending on infrastructure remains weak, the Texas concrete contractors ratings could be cut.

If Texas Industries' earnings before interest, taxes, depreciation and amortization stays below $80 million in fiscal 2011, it won't be enough to cover the company's fixed costs, S&P said.

S&P also said it could raise the ratings if sales rise more than 20 percent and adjusted earnings margins increase to over 13 percent in the first half of fiscal 2011. But S&P believes a rating upgrade is unlikely given poor business conditions.

California Panel wants a Say on Insurance Rate Hikes

A Times

Assembly committee passes a bill requiring companies to justify increases. The measure faces an uncertain future in the full Legislature amid an industry lobbying effort.

Reporting from Sacramento — California lawmakers who want to go further than the newly signed federal healthcare overhaul scored a victory Tuesday when a proposal to make insurance companies justify rate hikes sailed through the Assembly's Health Committee.

The bill would put health insurers and health maintenance organizations under the same strict regulation that has covered automobile and other types of property insurance for the last two decades. It would require approval of some rate hikes by state agencies.

"Now that Congress has mandated that every American must show proof of owning a health insurance policy or face fines, California must ensure that the prices that insurers charge for coverage are fair," said Jerry Flanagan, healthcare policy director for Consumer Watchdog.

The bill, AB 2578, is similar to one the Assembly passed in 2007, only to see it die in the Senate by one vote. But this time, the bill's supporters hope that public outrage will help get the bill passed.

They believe momentum is on their side, not only because of the overhaul package President Obama signed into law Tuesday, but also because of the recent decision by Anthem Blue Cross to hike premiums as much as 39% on some individual policies.

The bill passed in the committee 11 to 3. But it faces an uncertain future as it moves further through the Legislature, where the influential insurance lobby is arguing against creating a new bureaucracy. Gov. Arnold Schwarzenegger, who would have final say if the bill gets to his desk, has not taken a position on the bill.

The measure is supported by AARP, consumer groups and labor unions, and opposed by insurance companies, the California Medical Assn. and groups that push for lower taxes.

The bill by Assemblyman Dave Jones (D-Sacramento) would force insurers to get approval for rate hikes exceeding 7% a year.

Health insurance companies and most preferred provider organizations would have to get approval from the Department of Insurance, while HMOs would have to get an OK from the Department of Managed Health Care.

The state agencies would be charged with determining that premium increases are "not excessive, inadequate or unfairly discriminatory," according to the bill.

Such oversight is needed, Jones said, because health insurance rates have been rising at a much faster pace than medical costs, which have been averaging a 4% increase annually in recent years.

Steep profits are not the reason that rates have skyrocketed, contended lobbyists for health insurance companies, who successfully opposed similar bills by Jones in 2007 and 2009.

The main cost drivers of California health insurance quotes, said Anne Eowan of the Assn. of California Life and Health Insurance Cos., are hospitals, doctors and pharmaceutical companies.

"The bill is premature, and we should wait and see" what happens at the federal level, said Eowan, the group's vice president of government affairs.

Another industry representative, Bill Wehrle of nonprofit Kaiser Permanente, said that creation of new bureaucracies could be expensive for taxpayers and slow innovations in treatment and the handling of claims.

But Laurel Kaufer, a Woodland Hills mother, complained that her biggest problem was a recent 34% rate increase to $1,100 a month from her insurer, Anthem Blue Cross.

"I am required to seek prior approval before I can expect to receive coverage from my insurance company," she said. "There is no good reason why Blue Cross should be allowed to raise my rates without prior approval."

U.S. Concerned by Australian Internet Filter Plan

CANBERRA, Australia (AP) - The United States has raised concerns with Australia about the impact of a proposed Internet filter that would place restrictions on Web content, an official said Monday.

The concerns of Australia's most important security ally further undermine plans that would make Australia one of the strictest Internet regulators among the world's democracies.

"Our main message of course is that we remain committed to advancing the free flow of information which we view as vital to economic prosperity and preserving open societies globally," a U.S. State Department spokesman Michael Tran told The Associated Press by telephone from Washington.

Tran declined to say when or at what level the U.S. State Department raised its concerns with Australia and declined to detail those concerns.

"We don't discuss the details of specific diplomatic exchanges, but I can say that in the context of that ongoing relationship, we have raised our concerns on this matter with Australian officials," he added.

Internet giants Google and Yahoo have condemned the proposal as a heavy-handed measure that could restrict access to legal information.

The plan needs the support of Parliament to become law later this year.

Australian Communications Minister Stephen Conroy says the filter would block access to sites that include child pornography, sexual violence and detailed instructions in crime or drug use. The list of banned sites could be constantly updated based on public complaints. If adopted into law, the screening system would make Australia one of the strictest Internet regulators among the world's democracies.

Conroy declined to comment on the U.S. concerns.

"The Australian and U.S. governments liaise regularly on a broad range of issues. It would be inappropriate to discuss the details of these consultations," said his spokeswoman, Suzie Brady.

Some critics of Australia's filter have said it puts the nation in the same censorship league as China.

Top 10 S&P 500 Stocks Change from 2007 Peak

USA Today

Beneath the surface of the market's steady advance, a dramatic race is taking place among leaders vying to become the USA's most-valuable company.

The Standard & Poor's 500 index hangs near bull market highs, having risen 4% this year and 66% from its 2009 bear market low. Four of its most 10 most-valuable companies —Wal-Mart, Apple, JPMorgan Chase and Berkshire Hathaway — weren't among the top 10 at the market's peak in 2007, according to data from S&P's Capital IQ.

This reshuffling may provide clues which company and industry will lead as stocks continue to claw their way back. "It's a changing landscape," says Jack Ablin of Harris Private Bank. "It's amazing."

The race to the top is revealing some trends in the market's mega leadership, including:

•The rise of Apple from underdog to titan. The biggest gainer among the top ranks is Apple, which appeared close to collapse 10 years ago but is now the fourth-most-valuable company in the S&P 500, beating out Warren Buffett's Berkshire Hathaway and General Electric.

Apple shares hit a new high Friday, giving it a value of $209 billion, just behind Wal-Mart at $212 billion and closing in on No. 2 Microsoft at $260 billion. (ExxonMobil at $314 billion is No. 1.) With the rising value comes a richer price, though: Apple trades at 22 times its earnings the past 12 months, vs. 15 for Wal-Mart and 16 for Microsoft.

•The resurgence of technology. The tech industry overall has regained the leadership crown. Tech companies account for 19% of the S&P 500's market value, making it the most heavily weighted sector of the 10 S&P tracks. Tech was the second-most-heavily weighted, trailing financials, at the 2007 market top, S&P says.

But tech's gains haven't been universal. Networking gear maker Cisco Systems was the eighth-most-valuable company when the market peaked in 2007, Capital IQ says. It's now No. 15.

•The decline of several stalwarts. AT&T and Citigroup have consistently been among the most-valuable companies. Both were in the top 10 at the 2007 peak. Now, though, Citigroup is ranked No. 21 even as two other banks have returned to the top 10 and AT&T is No. 14.

Certainly, it's too soon to count out former heavyweight companies and industries. There's still time for companies to show how they used the recession as a chance to retool for the recovery, says Doug Sandler of Riverfront Investment Group. "The market has been about fear vs. reality. Now it's about the companies that can deliver."

Health Law Cuts the Costs of Being a Woman

NY Times

Being a woman is no longer a pre-existing condition. That’s the new mantra, repeated triumphantly by House Speaker Nancy Pelosi, Senator Barbara A. Mikulski and other advocates for women’s health. But what does it mean?

In the broadest sense, the new health care law forbids sex discrimination in health insurance. Previously, there was no such ban, and insurance companies took full advantage of the void.

“The health care industry and health care insurance in general has been riddled with the most discriminatory and unfair practices to women,” said Marcia D. Greenberger, the founder and co-president of the National Women’s Law Center. “This law is a giant leap forward to dismantling the unfairness that has been a part of the system.”

Until now, it has been perfectly legal in most states for companies selling individual health policies — for people who do not have group coverage through employers — to engage in “gender rating,” that is, charging women more than men for the same coverage, even for policies that do not include maternity care. The rationale was that women used the health care system more than men. But some companies charged women who did not smoke more than men who did, even though smokers have more risks. The differences in premiums, from 4 percent to 48 percent, according to a 2008 analysis by the law center, can add up to hundreds of dollars a year. The individual market is the one that many people turn to when they lose their jobs and their group coverage.

Insurers have also applied gender-rating to group coverage, but laws against sex discrimination in the workplace prevent employers from passing along the higher costs to their employees based on sex. Gender rating has taken a particular toll on smaller or midsize businesses with many women, like home-health care, child care and nonprofits. As a result, some businesses have been unable to offer health coverage or have been able to afford it only by using plans with very high deductibles and New York health insurance quotes.

In addition, individual policies often excluded maternity coverage, or charged much more for it. Now, gender rating is essentially outlawed, and policies must include maternity coverage, considered “an essential health benefit.”

“It has to be a part of the premium just like heart attacks, prostate cancer or any other condition,” Ms. Greenberger said.

Despite her enthusiasm for many aspects of the new law, Ms. Greenberger said she was profoundly disappointed in provisions that she thought would limit women’s access to abortion services.

Advocates for women’s health said one of the new law’s benefits would be to ban the denial of health coverage to women who have had a prior Caesarean section or been victims of domestic violence. Some companies providing individual policies have refused coverage in those circumstances, regarding Caesareans or beatings as pre-existing conditions that were likely to be predictors of higher expenses in the future.

In a statement issued Thursday, Senator Mikulski said: “One of my hearings revealed that a woman was denied coverage because she had a baby with a medically mandated C-section. When she tried to get insurance coverage with another company, she was told she had to be sterilized in order to get health insurance. That will never, ever happen again because of what we did here with health care reform.”

Peggy Robertson, 41, who lives in Centennial, Colo., is the woman to whom Senator Mikulski referred. Ms. Robertson was interviewed by The New York Times in June 2008 and testified at the hearing last October. Her husband, a chiropractor, is self-employed, so they rely on the individual market to cover them and their two sons. In 2007, they had insurance, but considered switching companies when a broker suggested they might find a better deal. They applied to a company called Golden Rule, which is based in Indianapolis and owned by UnitedHealthcare. The company rejected Ms. Robertson because of her Caesarean, explaining in a letter that she would have been eligible if she had been sterilized. When Ms. Robertson went public with her story, the word “sterilized” seemed to provoke particular outrage, she said.

Golden Rule later began offering coverage to women who had had Caesareans, but by charging extra if they wanted maternity coverage, or issuing policies that excluded maternity care.

In a telephone interview on Friday, Ms. Robertson said: “Barbara Mikulski told me, she promised me, ‘This will never happen again.’ She did it. It’s wonderful.”

Ms. Robertson’s only disappointment was that some of the new rules would not take effect until 2014.

But Ms. Greenberger said that while it is true that the specific requirements will be delayed until 2014, some changes should actually happen much sooner, because the law’s overarching ban on sex discrimination takes effect immediately. The legalese outlawing sex discrimination is not easy to find or to parse, but it refers to existing laws, like the Civil Rights Act and Title IX, to say that the same protections apply to people seeking health care and insurance.

The passage, Sec. 1557 on page 368 of the 2,074-page bill, says: “Except as otherwise provided for in this title (or an amendment made by this title), an individual shall not, on the ground prohibited under Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving federal financial assistance, including credits, subsidies, or contracts of insurance, or under any program or activity that is administered by an executive agency or any entity established under this title (or amendments).”

What it means, Ms. Greenberger said, is that no organization receiving any federal money at all — as insurers generally do — can discriminate on the basis of sex. Gender rating, she said, “is a problem whose days are numbered.” This includes California health insurance quotes.

Ms. Greenberger acknowledged that insurance companies were masters at protecting their bottom line, but said she did not see an obvious way around the new rules. “I never want to underestimate what a creative mind might be able to come up with,” she said, “but I believe this is pretty straightforward.”

The Good and the Bad in Health Care Reform for Small Businesses

USA Today

What's in it for me? If you run a small business or are self-employed, you probably want to know what's in the health care legislation for you personally. Let's get beyond the rhetoric and the partisanship and look into the details.

The good news: For the first time, there's real help for entrepreneurs. If you can't afford or can't qualify for insurance, you'll have new options starting in 2014. If you're struggling financially – as many self-employed do – you may qualify for a government subsidy or Medicaid. If you have a pre-existing condition, you can't be denied insurance. And – whoopee! — I'm personally going to get a tax credit starting this year. If you offer health insurance to your employees, it's likely you will too.

The downsides: There are no caps on health insurance premiums, so I expect insurance companies to hike rates significantly before they have competition in 2014. If you have more than 50 employees, you'll have to provide coverage or pay a fine beginning 2014. As of 2013, there'll be new taxes on some types of income typically received by successful small business owners.

Bottom line: If you're self-employed or have a business with fewer than 25 employees, it's probably going to be financially advantageous for you to be incorporated or an LLC (limited liability company), provide coverage through the business (rather than buy it individually), and, most likely, purchase through a state-established exchange set up beginning 2014.

So what's in the legislation for your small business or for the self-employed?

•Tax Credit. Starting with 2010 taxes, small businesses with fewer than 25 employees that pay at least 50% of the health care premiums for their employees qualify for a tax credit up to 35% of your premiums (50% after 2014 if you purchase insurance through an exchange). How much of a credit you'll get depends on the number of employees you have and their average wage. Gotcha alert: The tax deduction is not available to sole proprietors, so you may want a different corporate legal form.

•Exchanges. Starting 2014, the biggest potential benefit may kick in with the establishment of Small Business Health Options Programs – or SHOP exchanges. These will enable small companies (up to 100 employees) to pool together to have greater buying power. Theoretically, this should result in lower premium costs and lower New York health insurance quotes.

•Subsidies. Starting 2014, many self-employed will qualify for a federal subsidy to help them afford the cost of purchasing health care. Those earning up to 400% of the poverty level will get assistance, or up to $88,200 for a family of four (at today's poverty level).

•Medicaid. Starting 2014, more lower-income individuals and childless adults would be covered by Medicaid, the federal health insurance plan for the poor. This can be a big help, especially for those just starting a business, without much income, who will have trouble meeting California health insurance quotes.

•Mandatory employer-provided coverage. Small businesses – with fewer than 50 employees – are exempt from mandatory requirements. Businesses with more than 50 employees will be required to provide coverage as of 2014 or pay a fine. That means those of us who provide health care coverage will no longer, in effect, be subsidizing our competitors (whose employees rely on public health services) who don't.

•Mandatory personal coverage. Also as of 2014, you'll be required to have health insurance or pay a fine. If you have to pay more than 8% of your income for the cheapest plan, you're not penalized.

•Pre-existing conditions. Starting June 2010, individuals who have not been able to get insurance because of pre-existing conditions can join a high risk insurance pool. As of 2014, insurance companies can not deny insurance to adults based on pre-existing conditions.

•Adult children. Starting in September 2010, dependent children up to age 26 can be covered on parent's policy

•Lifetime limits. Starting September 2010, there can be no lifetime maximum limits on policies. Also, companies can not rescind policies except for fraud.

•Preventive care. Starting September 2010, coverage must include basic preventive care. As many small businesses can now only afford catastrophic coverage, this may mean additional benefits.

•Taxes. Starting January 2013, if you make over $200,000 (individual) or $250,00 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend, or interest income with an additional 3.8% tax on that income.

•"Cadillac" plans. Starting 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40% tax on the excess cost of the premium. This could be a big burden on small businesses, as many premiums are already at that rate for even basic coverage.

U.S.-Bound Boxes Pile Up at Asian Ports as Ship Lines Avoid Adding Vessels

Bloomberg

South Korea’s biggest port, overwhelmed with empty containers a year ago, is now dealing with shipping lines that have more cargo than they can carry.

Surging shipments of furniture, electronics and clothes to the U.S. and Europe, coupled with capacity cuts by shipping lines, has caused as much as 15 percent of containers to be delayed in Busan this year, often by more than a week, according to Park Jong Ho, assistant general manager at Busan International Container Terminal Co.

“With the economy recovering, we have been seeing a lot of containers that didn’t make it out on time because there wasn’t enough space on ships,” he said.

A capacity crunch on transpacific routes has disrupted deliveries of Asian and U.S. exports, prompting a probe by U.S. regulators. Container lines have cut trips and imposed higher rates on customers, or shippers, after slumping trade and an excess supply of vessels caused industrywide losses of about $20 billion last year, according to Drewry Shipping Consultants Ltd.

“There is seething anger in the shipper community over the way rates have been raised,” said Bjorn Van Jensen, who manages more than 100,000 container shipments a year as logistics head at appliance-maker Electrolux AB. “Carriers see a tight supply situation and they are looking to get rates back up.”

Container Traffic

Container shipments at Busan, the world’s fifth-busiest port, rose 21 percent in the first two months, rebounding from the slump last year that forced Park to lease extra space to help store more than 31,000 empty boxes. In the U.S., retail container traffic will likely rise 13 percent this month and by 17 percent in the first half as shops restock, according to the Washington-based National Retail Federation.

That’s caused rates for ad hoc shipments on Asia-U.S. routes to jump about 50 percent this year to around $2,100 per forty-foot box, according to Johnson Leung, a Hong Kong-based analyst at Tufton Oceanic Ltd., the world’s largest shipping hedge-fund group.

“The volume is surprisingly high,” he said. “Still, rates were at low levels at the beginning of this year, and shipping lines have to increase them to break even.”

U.S. customers have also contributed to the disruptions and higher rates by cutting inventories to two-year lows and placing more rush orders on concerns about holding stock.

“The trend now is that orders are always made from Europe and the U.S. very rapidly and at the very last minute,” said Ken Lee, a general manager in the sea-freight unit at Hong Kong- based Vinflair Shipping Ltd.

The U.S. Federal Maritime Commission earlier this month began a “fact-finding investigation” into shipping capacity because of U.S. importers and exporters’ struggles to find space.

Temporary Trend?

Lines haven’t added more vessels on transpacific routes, citing concerns about the sustainability of demand. The jobless rate in the U.S. remains near 10 percent. Building permits, a sign of future construction, also fell 1.6 percent last month after a 4.7 percent drop in January.

“We have seen no reason to add extra ships as the trend is temporary,” said A.P. Moeller-Maersk A/S CEO Nils Smedegaard Andersen. “With the problems this industry has had, I think we’re all be very cautious before sending new ships into service.”

Maersk expects a “modest” 2010 profit following its first loss in six decades last year. Industrywide, container lines may pare loses to about $7 billion this year, according to Drewry.

Annual Contracts

The surge in shipments coincides with annual contract negotiations between lines and customers. Maersk and Mediterranean Shipping Co., the world’s two largest container lines, and 13 others are seeking an extra $800 per cargo box on Asia-U.S. west coast routes. That’s about a 50 percent increase, according to Leung.

“If we can get an agreement for that kind of rate increase, then a lot of the shipping companies will become profitable,” said Kim Young Min, chief executive officer of Hanjin Shipping Co. and chairman of the Transpacific Stabilization Agreement, or TSA, whose 15 members carry almost 90 percent of Asia-U.S. boxes.

Lines in the group, which has limited U.S. antitrust protection, are already imposing a $400 per container “emergency revenue charge” to pare losses on contracts agreed last year during the worst of the trade slump. Rates fell by as much as half in those deals, according to the TSA. The charge will be discontinued when the new contracts start around May.

Hardened Gamblers

Customers have to accept additional levies or lines won’t carry their cargo, Stockholm-based Electrolux’s Jensen said. That’s causing “enormous uncertainty” as shippers don’t know whether additional levies will follow, he said.

“I don’t know anybody who thrives on this kind of volatility except hardened gamblers,” he said. Even so, “shippers understand that rates have to come back up” as the lines’ losses are unsustainable, he said.

New ship deliveries may disrupt lines’ efforts to raise rates this year as shipyards hand over vessels ordered before the trade slump began. Shipbuilders hold container-vessel orders with a combined capacity equal to about 33 percent of the existing global fleet, according to data compiled by Bloomberg.

“New capacity entering service this year could weigh on rates,” said Jay Ryu, a Hong Kong-based analyst at Mirae Asset Securities Co. “This isn’t really a recovery because lines have reduced capacity and manipulated the market.”

Amid last year’s slump, lines mothballed more than 500 ships worldwide to pare capacity. They also began operating vessels at slower speeds, which cuts fuel usage and reduces the total amount of cargo each ship can haul per month.

Such steps are likely to continue because of the oversupply of ships, said Tung Chee Chen, chairman of Orient Overseas (International) Ltd., Hong Kong’s biggest container line.

“We learnt a very bitter lesson last year,” he said about the industry. “We will all be more careful and disciplined in managing our tonnage and warehouse material handling this year.”

Law Recruitment -- 'Apprentice' - Style

TimesLive

With companies keen to attract the best and the brightest, the recruitment process is going through significant changes.

Law firm Werksmans, for example, has launched The Candidate Challenge 2012, a concept based on the TV show The Apprentice.

The Candidate Challenge gives law students a chance to secure their articles and become full-fledged attorneys.

The candidate who has what it takes will be guaranteed an interview with the firm's CEO, Jeremy Botha, for the firm's 2012 intake of candidate attorneys.

"We are throwing down the gauntlet on a special website and using other popular social media, including Facebook, to spread the word," said Werksmans chief marketing officer, Nicky Holmes.

"In this way, the firm aims to attract the best and brightest young lawyers with the characteristics essential for a successful legal career - drive, direction, intellect and commitment."

Werksmans' approach is a departure from the usual practice where graduate recruitment campaigns are used to attract graduates.

"Our campaign aims to uncover the unique potential of law students and give them an opportunity to shine, but on their own terms," said Holmes.

The campaign, run as a competition, requires potential candidates to register online and give a motivation of why they should be chosen.

"In the process, we are positioning the firm as approachable, direct and dynamic, as opposed to the remote, rather impersonal image that other more conventional campaigns tend to project," said Holmes.

And, as recruitment strategies have changed, so has the manner in which human resource departments are run.

The University of Stellenbosch Business School (USB), having recently carried out research into how global businesses manage staff to remain competitive in international markets, says that human resources can have a huge effect on a company's success.

MBA student Gary Pienaar and Professor Laetitia van Dyk found that to win the battle, companies must keep learning and innovate faster than their competitors.

"As a result, contemporary businesses have to tap more into the creativity and knowledge of their workforce, which has a major impact on the people element of business and organisational life," say the researchers.

But "innovative behaviour requires committed people and an environment that encourages and rewards creativity and risk-taking".

The researchers found that there was agreement among analysts that future business success depended on the ability to attract and retain skilled people.

A strong employer brand is crucial in attracting talent.

Ideally the human resources and marketing departments should work together to create a powerful and attractive employer brand, the USB researchers concluded. 

Medical Costs Weighed Less on Californians in 2001-2006 than in other States

LA Times

Californians with health insurance spent a smaller share of their incomes for medical care than insured people in most other states from 2001 to 2006, research has concluded.

Just 12% of those with insurance in the state faced a "high financial burden" for healthcare during that time, meaning they spent more than 10% of family income on insurance premiums and healthcare services, according to a report this week by the Center for Studying Health System Change.

That put California in the bottom rung of 29 states in the study, which looked at care received by people under age 65.

The 12% figure was the lowest among the states from 2004 to 2006. Arizona, Illinois and Georgia also had low rates during that time.

The study's author attributed California's showing to two factors: relatively high household incomes that made healthcare costs less burdensome, and large numbers of people served by health maintenance organizations, which charge lower fees than other traditional insurers but impose more restrictions on care.

"I'm sure there are a lot of people who feel the pain from high California health insurance quotes, but relative to other states, California was in pretty good shape," said Peter Cunningham, a senior fellow at the nonpartisan research center in Washington.

"If you were insured in California during the first part of the decade, you spent a lower percentage of your income on healthcare costs than you did in most of other states," Cunningham said.

The report did not factor in the effects of the recent recession or the effect of national healthcare reform.

It found that a growing percentage of Americans faced burdensome healthcare costs from 2001 to 2006. In 2001, 14% of those with insurance faced high financial burdens. Five years later, that figure climbed to 19%.

Cunningham said healthcare costs increased more dramatically for people who bought individual insurance policies compared with those who received coverage through their jobs. Prices in individual markets can vary more than in group markets because of the smaller size of the insurance pool.

The research pointed out that middle- and high-income people with private insurance experienced the greatest increase in financial burden over the six-year period. Even though they had more money to spend on medical care initially, medical costs rose faster than their incomes.

Lawyers Circle Toyota

LA Times

In San Diego, 150 attorneys gather to plot strategy for what could be a deluge of lawsuits to come against the automaker.

Reporting from San Diego — First came the reports of sudden acceleration, then the recalls. And now, inevitably, the lawyers. Lots of them.

With Toyota Motor Corp. already facing scores of lawsuits stemming from alleged sudden acceleration incidents, about 150 lawyers gathered Wednesday for an all-day event to discuss litigation strategy over claims of deaths and injuries in accidents as well as the loss of resale value of used Toyota vehicles.

 Those attending, including veterans of class-action litigation, didn't shy away from portraying the situation as an opportunity of historic proportions.

"We've got a wonderful opportunity to fight a multifront war," said W. Mark Lanier of the Lanier law firm of Houston, flashing on a screen a map suggesting the Allies' assault on Nazi Germany during World War II.

How much money is involved?

"A hell of a lot," said San Diego lawyer Kerry Steigerwalt, whose firm already has Toyota clients.

Indeed several law firms represented at the event, hosted by HarrisMartin Publishing, a Pennsylvania-based publisher and website operator specializing in the legal and insurance industries, have clients suing Toyota. Others there were hoping to attract such clients.

A seven-judge panel known as the U.S. Judicial Panel on Multidistrict Litigation is currently weighing whether to combine the disparate class-action suits and, if so, where to send the mega-case. But other suits will fall outside that category, raising a raft of issues.

Toyota declined to comment on the lawyer event.

"It regards pending litigation," spokesman Mike Michels said.

One of the themes of the event, held at the Westin Hotel in downtown San Diego, was that Toyota has erred repeatedly in dealing with the situation. Among the claimed missteps: stalling on fixing problems, stonewalling customers seeking help, and issuing a late and unsatisfying apology.

Toyota's strategy, said Jimmy Faircloth of the Faircloth law group in Alexandria, La., was classic old-school: hope the bad news goes away. When it didn't, a carefully parsed apology followed.

"I don't care if it's Tiger Woods, Bernie Madoff, or Toyota, if an apology comes late it's going to be seen as phony," Faircloth said.

Toyota's approach, said Ken Seeger of the Seeger, Salvas law firm in San Francisco, has been "purely market-driven, cold-hearted, insincere."

"They tried to declare they had the problem solved when they really didn't know what the problem was," he said.

If the engineering issues involved in the Toyota cases are complex, so too are the legal ones. Lawsuits have been filed in at least 19 legal jurisdictions.

The lawyers weighed whether or not the cases should be lumped together and if so, where and with what judge?

 Different states have different takes on damage limits, statutes of limitations, and warranties.

"That's going to be a hot issue," said Elizabeth J. Cabraser of Lieff, Cabraser, Heimann and Bernstein of San Francisco, a veteran of numerous major cases, including litigation over breast implants.

Not every judge has the time or the skills to deal with a case of such complexity that involves multiple jurisdictions and mountains of technical and legal documents, the attorneys agreed.

"This needs a smart, creative judge to do this, preferably one who has done it before," said Shawn G. Foster of Davis, Bethune and Jones of Kansas City, Mo.

Lanier, who recently won $54-million jury verdict for a paralyzed heavy-equipment operator, said he already has a former Toyota employee ready to testify that the corporation lies as a matter of strategy "and he's got documents to back it up."

He charged that Toyota didn't put enough back-up systems in its vehicles.

"The commode in my home has more redundancy than their cars," he said.

With the possibility looming of hundreds of lawsuits, one tactic might be what is called a bellwether approach -- several cases bundled together. The verdict can goad litigants to settle other cases without trial.

"I'm a major fan of bellwether cases because I think it leads to global settlements," said Dawn Barrios of Barrios, Kingsdorf, and Casteix of New Orleans.

The session was held just a few miles from where two of the most highly publicized incidents involving Toyota vehicles occurred: the deaths of an off-duty CHP officer and his family in the crash of a speeding Lexus, and the case of a driver who said he had to struggle to stop his runaway Prius on Interstate 8.

Toyota has issued more than 10 million recall notices recently because of supposed accelerator pedal and floor mat problems and other safety issues. The conference "will help us all be on the same page," said Steigerwalt. "What we don't want is all of us fighting different battles with Toyota."

Although the session was open to all, no Toyota lawyers were known to have attended. Some of the lawyers who were there felt that Toyota, after an initial case or so, would settle other cases. But other lawyers predicted years of litigation, with Toyota concerned about how losing or settling cases will affect its stock price.

"It's not going to be just resolved," Lanier said. "It's going to be tried, tried and tried."

Stimulus Funding Spurs Advanced Battery R&D for Hybrid Electric Vehicles

Examiner Chicago

In order to accelerate the R&D, manufacturing and deployment of hybrid electric vehicles, batteries, and components in the United States and create tens of thousands of new jobs, President Barack Obama announced last August- 48 advanced battery and electric drive projects that will receive $2.4 billion in competitive Department of Energy (DOE) funding through the Recovery Act, which will be matched with another $2.4 billion in cost share from the award winners. This stimulus funding will facilitate the country in achieving President Obama’s goal of putting one million (grid) plug-in hybrid vehicles on the road by 2015 in order to lessen greenhouse gas emissions and smog effects.

The primary stimulus funding grant categories are as follows:

1. $1.5 billion for U.S.-based manufacturers to produce batteries and their components and to expand battery recycling capacity

 

2. $500 million for U.S.-based manufacturers to produce electric drive components for vehicles, including electric motors, power electronics, and other drive train components
 

3. $400 million to purchase thousands of plug-in hybrid and all-electric vehicles for test demonstrations; to deploy them and evaluate their performance; to install electric battery charger infrastructure; and to provide education and workforce training to support the transition to advanced electric transportation systems.

The state of Michigan, home to the Motor City, was the big winner, as they received $1 billion in grants to companies and universities- the most of any state. Two companies, A123 and Johnson Controls (which also has a facility in the Phoenix, AZ area) will receive a total of approximately $550 million to establish a manufacturing base in the state for advanced batteries, and two others, Compact Power and Dow Kokam, will receive a total of over $300 million for manufacturing battery cells and materials.

The U.S. government is now spreading the wealth of R&D dollars, as opposed to primarily funding only national labs, universities and domestic automakers. Of course, the DOE never had anywhere near this amount of funding previously to allocate, since the Stimulus spurred the nation’s largest single investment in hybrid electric vehicle technology ever. Moreover, the past two Obama Administration fiscal year budgets significantly reduced funding levels for hydrogen fuel cell alternatives set by the Bush Administration, while supporting increases for advanced batteries instead.

Lithium ion batteries are receiving the majority of the stimulus funding emphasis with respect to battery options for hybrid electric vehicles, since they are presumed to be the top candidate but are not ready for prime time. These types of batteries are rapidly penetrating into laptop and cell-phone markets because of their unique electrical characteristics, high energy-efficiency, high temperature performance, and low self-discharge. What’s more, components of lithium ion batteries can also be recycled. These features are also beneficial for hybrid electric vehicle applications. However, to make them commercially viable for electric autos, significant R&D is necessary, focused on calendar and cycle life, cell and battery safety, abuse tolerance under harsh conditions, and acceptable cost for consumers.

EnerDel, an electric car battery manufacturer with three Central Indiana plants, was awarded a $118.5 million stimulus grant yesterday to develop lithium ion batteries for hybrid electric cars. The grant will allow EnerDel to buy equipment to expand its production from 1,200 batteries a year to 60,000 annually and is expected to generate 1,400 green jobs. As part of the project, 100 electric cars will likely be on Indiana roads by the beginning of next year and a thousand by the middle of 2012.

In opposition to this momentum for hybrid electric vehicles, T. Boone Pickens has been ramping up his campaign supporting the transition of the nation’s auto fleet to readily abundant domestic natural gas. He helped formulate the Natural Gas Act, which is still being considered in Congress, along with cap-and-trade and other alternative energy legislation that has been delayed by the health care debate after many months.

More Cities Ban Digital Billboards

USA Today

As the USA cracks down on texting while driving, more than a dozen cities around the nation have banned what some consider a growing external driving distraction: digital billboards.

Digital billboards change images every four to 10 seconds, flashing multiple messages from one or more advertisers on the same sign. Opponents such as John Regenbogen of Scenic Missouri deride them as "television on a stick."

Several communities have banned digital billboards outright, the most recent being Denver earlier this month. Other places have put a moratorium on them pending a federal study on whether they distract drivers. At least two other cities and two states are studying moratoriums.

"The digital billboards are a distraction," says Fred Wessels, an alderman in St. Louis, which just approved a one-year moratorium on new such signs in that city.

"If they weren't distracting, they wouldn't be doing their job," says Max Ashburn, spokesman for Scenic America, a national non-profit group that seeks to limit billboards.

Research on the issue is mixed. A Virginia Tech Transportation Institute study in 2007, financed by the billboard industry, found that they aren't distracting. A review of studies completed last year for the American Association of State Highway and Transportation Officials, however, concluded that they "attract drivers' eyes away from the road for extended, demonstrably unsafe periods of time."

"There's no doubt in my mind that they are not a driving distraction," says Bryan Parker, an executive vice president for Clear Channel Outdoor, which owns about 400 digital billboards. He cites industry-sponsored studies of collisions before and after digital billboards were installed in Albuquerque, Cleveland, and Rochester, Minn., that found no correlation.

"We've looked at that very carefully," says Bill Ripp, vice president of Lamar Advertising, which owns 159,000 billboards, 1,150 of them digital. "We don't want to cause any unsafe conditions for drivers."

Digital billboards are a fast-growing segment of the outdoor advertising market. Since a federal rule against them was eased in 2007, the number of digital billboards has more than doubled to about 1,800 of 450,000 total billboards. At least 39 states allow them. They cost an average $200,000 to $300,000 apiece, according to the industry group Outdoor Advertising Association of America.

In 2007, the Federal Highway Administration relaxed a rule against digital billboards, saying they don't violate the 1965 Highway Beautification Act's ban on "intermittent," "flashing" or "moving" lights. FHWA is researching the signs, using eye-trackers inside volunteers' vehicles to determine whether drivers look at the billboards and for how long. The study is to be completed this summer.

There is little current data on whether greater distractions for drivers come from in-vehicle or external factors. The Department of Transportation, which is leading the national push against texting while driving, says that 5,870 people were killed in distracted driving crashes in 2008. But the agency has not determined how many of those deaths involved an electronic device, another distraction such as eating or tuning the radio, or something outside the vehicle.

Aid Plan Could Lower Payments on More Underwater Mortgages

USA Today

After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. In addition, the homeowner's existing mortgage company will get incentives to lower the principal balances on underwater loans.

The plan, announced Friday, would also enable the borrowers' existing mortgage companies to receive incentives to lower their principal balances.

To be eligible for the FHA refinancing program, borrowers who owe more than the value of their homes, known as being "under water," must not have fallen behind on their existing mortgage payments.

Separately, the program also would reduce monthly payments for unemployed homeowners for up to six months.

The administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners.

"There's no intention here of tackling what may be 10 to 12 million foreclosures over the course of the next three years," said Diana Farrell, a White House economic adviser.

Instead, officials said, the goal is to make it more likely the administration will meet its original target, announced last year, of assisting 3 million to 4 million struggling homeowners.

That would be "enough to provide help to those for whom help is worthwhile ... and to provide some kind of stability in the market."

The plan won't assist investors and speculators or "Americans living in million dollar homes or defaulters on vacation homes," an administration fact sheet said.

Some homeowners will not be able to afford to stay in their homes because they bought more than they could afford, officials said.

To help borrowers who have been hurt by falling home prices, the government also will require mortgage servicers to consider cutting a loan's principal if it is up to 15% more than the home is worth, officials said.

The principal would be reduced over three years as long as the borrower stays current on payments.

In addition, servicers will get more incentives — double the amount the government now pays to lenders — if they reduce the unpaid balance of second loans.

The changes reflect a new attack by the Obama administration to address the foreclosure crisis, which at first was driven by subprime mortgages going delinquent, and now is being fueled by unemployment.

The current program provides modified mortgages to homeowners who show proof of income.

"The cost is going to depend on the participation rate. In terms of the cost to taxpayers, the cost of not doing something is greater than doing something," says Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable. "Up to now, there was no government program to help the unemployed, and that was the biggest problem."

The federal program, known as the Home Affordable Modification Program (HAMP), is aimed at helping up to 4 million Americans avoid foreclosure. So far, about 170,000 homeowners have been granted permanent modifications with lower monthly payments through the plan.

Also Thursday, the Treasury Department announced new measures that buy time for some borrowers to avoid losing their homes to foreclosure.

Lenders soon will be unable to start foreclosures unless they've determined borrowers aren't eligible for a modification.

Other changes announced Thursday will provide other protections for troubled homeowners. They include:

•Ensuring servicers intervene once two or more mortgage payments are missed and actively solicit borrowers for the federal program.

•Setting a 30-day deadline for lenders to decide applications for trial modifications.

•Requiring servicers to consider borrowers who file for bankruptcy-court protection for the HAMP program if the borrower, their lawyer or bankruptcy trustee make a request.

The four big holders of second mortgages —Citigroup, Bank of America, Wells Fargo and JPMorgan Chase — have now joined the government's program to modify second mortgages. That program was delayed for months but with Citi on board, the major players in the New York homeowners insurance industry are now participating.

Critics have complained that the Obama administration has done little until now to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" — they owe more than their property is worth — according to Moody's Economy.com.

AT & T will Take $1Billion Non-Cash Charge for Health Care

NEW YORK (AP) - AT&T Inc. will take a $1 billion non-cash accounting charge in the first quarter because of the health care overhaul and may cut benefits it offers to current and retired workers.

The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.

All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&T's most recent quarterly earnings. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits - including the subsidies - from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

AT&T also said Friday that it is looking into changing the health care benefits it offers because of the new law. Analysts say retirees could lose the prescription drug coverage provided by their former employers as a result of the overhaul.

Changes to benefits are unlikely to take effect immediately. Rather, the issue would most likely come up as part of contract negotiations between the company and unions representing its employees and retirees. AT&T is the largest private employer of union workers in the U.S.

Candice Johnson, spokeswoman for the Communications Workers of America, which represents more than 160,000 AT&T workers, said these employees have contracts in place until 2012. An agreement covering retirees also runs through 2012.

AT&T rival Verizon Communications Inc. was among 10 companies that sent a letter to congressional leaders in December warning that their costs would increase with the health care changes. Verizon spokesman Peter Thonis said the company had no comment.

Also on Friday, Reps. Henry Waxman, D-Calif., and Bart Stupak, D-Mich., said they are asking the CEOs of Caterpillar, Verizon, Deere and others to testify at an April 21 House subcommittee hearing on claims that the health care law could hurt their ability to provide health insurance to workers.

Shares in AT&T, which is based in Dallas, climbed 9 cents to close Friday at $26.24.

China Steams Ahead on Clean Energy

BBC News

Projects like Donghai Bridge wind farm in Shanghai have pushed China ahead

China overtook the US during 2009 to become the leading investor in renewable energy technologies, according to a new analysis.

Researchers with the Pew Charitable Trusts calculate that China invested $34.6bn (£23.2bn) in clean energy over the year, almost double the US figure.

The UK emerges in third place among G20 nations, followed by Spain and Brazil.

The most spectacular growth has come in South Korea, which saw installed capacity rise by 250% in five years.

Globally, investment has more than doubled in the last five years, Pew finds, with the recent economic turmoil generating only a slight dip.

"Even in the midst of a global recession, the clean energy market has experienced impressive growth," said Phyllis Cuttino, director of Pew's campaign on climate change.

"Countries are jockeying for leadership.

"They know that investing in clean energy can renew manufacturing bases, and create export opportunities, jobs and businesses."

The US still holds a marginal lead in the total amount of installed capacity, but will be overtaken by China during the course of this year if existing trends continue.

Diversification nation

China's target of having 30GW of installed renewable capacity in place by 2020 will soon be exceeded through wind alone, and new targets are in the process of being set.

"The government has taken a strategic decision that diversifying its energy supply should be a national priority," commented Steve Sawyer, secretary-general of the Global Wind Energy Council (GWEC), who was not involved in the Pew report.

"It is now the world's leading manufacturer of solar photovoltaic cells, and more wind turbines are made in China than anywhere else."

However, China's use of fossil fuels is also expanding fast.

So far, renewables account for a small share of its energy supply, although the overall target is a 15% share of total energy by 2020.

Wind was the dominant sector in most of the high-investing countries, the exceptions being Spain, Germany and Italy where solar technologies commanded a majority share.

US investment fell by 40% during from 2008 to 2009.

"The US's competitive position is at risk in the emerging clean energy economy," said Ms Cuttino.

Spain's investment also dropped due to the recession, following several years of rapid increases driven by the desire to cut greenhouse gas emissions very quickly in order to reach its Kyoto Protocol target.

Pew notes that the UK achieved its third place through "large offshore wind deals, backed by the government", and by being "at the forefront of marine energy investments."

Pew based its analysis on the database maintained by Bloomberg New Energy Finance, the international analysis and consultancy group.

Kraft to Trim Sodium Levels in Pre-Packaged Food Products

Reuters

Kraft Foods, the maker of Oreo cookies and Velveeta cheese, plans to cut sodium levels in its North American products by about 10 percent over the next two years, making it the latest food maker trying to address health concerns as pressure mounts from government.

The largest North American food maker said on Wednesday that its plans would eliminate more than 10 million pounds -- or more than 750 million teaspoons -- of salt from some of North America's most popular foods.

The news came a day after the world's No. 2 soft-drink maker, PepsiCo, said it would to stop sales of full-sugar soft drinks to primary and secondary schools on a global scale by 2012.

Lawmakers in more than a dozen U.S. states are campaigning to tax sugary beverages to cover obesity-related health costs.

Earlier this week, U.S. first lady Michelle Obama -- who is leading a major administration initiative on child obesity -- urged food makers to work faster to re-formulate or re-package food to make it healthier for kids.

"We need you not just to tweak around the edges but to entirely rethink the products that you're offering, the information that you provide about these products, and how you market those products to our children," she said.

Last month, President Barack Obama asked Cabinet officers to come up with an interagency plan and asked his wife to head a national public awareness effort.

Two industry groups, the American Beverage Association and the Grocery Manufacturers Association have pledged their help.

The administration also said it would provide $400 million for its Healthy Food Financing Initiative to eliminate "food deserts" where the only food sources are typically convenience stores or gas stations.

Barnes-Jewish Teams with NFL on Retiree Care

St. Louis Business Journal

Barnes-Jewish Hospital and the Washington University School of Medicine will participate in a new neurological care program for retired NFL players announced Wednesday by the National Football League and the NFL Alumni Association.

The St. Louis hospital is one of only five medical centers across the country selected for the program.

Each center will provide retired players with a team of specialists to evaluate and treat possible neurological conditions. The teams will be led by a neurologist who will serve as a program director. Dr. David Brody, an assistant professor of neurology at the Washington University School of Medicine, will lead the effort at Barnes-Jewish.

The program is one of several initiatives by the NFL to address health care and quality of life issues for the league’s retirees. It comes as greater attention is being placed on the long-term neurological effects of concussions and other head trauma common in professional football.

Brody’s team includes St. Louis neurologist Dr. Maurizio Corbetta; neuropsychologists Drs. Robert Fucetola and Nicole Schwarze; and neuroradiologists Drs. Tammie Benzinger and Joshua Shimony. Together they have studied the effects and treatment of repetitive traumatic brain injuries on athletes, military personnel and others for several years with the financial backing of grants from the National Institutes of Health and the U.S. Department of Defense. Such injuries can cause cognitive abnormalities, emotional changes, seizures and other problems.

Brody said he hopes the hospital’s new affiliation with the NFL will raise additional awareness of concussive brain injuries as well as help Barnes-Jewish and other participating medical centers to raise funding for additional research.

“We hope to develop systematic approaches to brain trauma assessment in St. Louis, and treatment to improve the quality of care,” Brody said. “We should now have a critical mass of organized physicians and scientists who can put together some meaningful protocols.”

The program is available to retired players vested under the Bert Bell/Pete Rozelle NFL Player Retirement Plan. Players who cannot afford treatment may apply to the NFL Player Care Foundation for a grant to cover some or all of the costs of treatment.

The other participating medical centers, selected for their “expertise, high-quality service and reputation,” are Morehouse School of Medicine in Atlanta; Mount Sinai Medical Center in New York City; the University of Southern California School of Medicine and its hospital affiliates in Los Angeles; and the University of California, San Francisco School of Medicine.

Pell Grant Increase Proposed

NY Times

The federal government would provide $36 billion in new financing for Pell grants to needy students over the next 10 years under legislation announced Thursday by Congressional Democrats.

The maximum annual Pell grant would rise to $5,975 by 2017, from $5,350 this year. The new Pell initiative includes $13.5 billion to cover a shortfall caused by the sharp increase in the number of Americans enrolling in college during the recession.

Congress would pay for the larger grants by ending subsidies to private banks that make student loans and shifting to direct federal lending.

But the amount going to education spending and aid for college students is far less than the Obama administration had hoped, largely because the savings from the switch to direct federal lending is now estimated to be $61 billion, rather than $87 billion.

In addition, $9 billion of the savings would be used to offset the costs of the health care overhaul proposed by the Democrats — an amount that lets the health care proposal meet requirements for the package to go through the budget-reconciliation process.

On top of that, $10 billion of the savings would go to deficit reduction.

“This legislation offers the most sweeping changes to the federal student loan program in a generation,” said Representative George Miller of California, chairman of the House Education and Labor Committee. “With one move, Congress can make college more affordable, keep jobs in America, prepare young people for our global economy, and reduce our deficit by billions.”

The banking community, which has lobbied fiercely against the student-loan legislation, rallied against the use of education savings to pay for health care.

“This is entirely unnecessary — there’s nothing in the reconciliation instructions that requires such a draconian cut in student aid, whatever the cause,” said a statement Thursday from America’s Student Loan Providers. At a news conference Thursday, Senator Tom Harkin of Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, said he was confident that there would be enough votes to pass the legislation, which is likely to be put to a vote Sunday.

Congressional leaders, and Arne Duncan, the secretary of education, hailed the package as a historic opportunity to help working- and middle-class Americans afford a college education.

But it is also true that the student-loan proposal has been cut back sharply from the Student Aid and Fiscal Responsibility Act that the House passed in October, based on a previous Congressional Budget Office estimate of $87 billion in savings.

The House bill provided billions for the construction, modernization and repair of school and community-college buildings, billions more to early childhood education, and further billions to help community colleges improve their graduation rates. All those have been eliminated, although community colleges would still get some new financing under the legislation.

Then, too, the House bill called for increasing Pell grants each year by the consumer price index plus 1 percent starting in 2013, to $6,900 by 2019. But to save money, the extra 1 percent was eliminated.

One of the few areas not cut was $2.55 billion for historically black and minority-service colleges, which remains the same as in the House legislation.

The Obama administration’s effort to end the subsidies and federal guarantees for student loans, known as the Federal Family Education Loan program, and redirect billions of dollars to students, has been strongly opposed by bankers, Republicans and some Democrats from areas with strong student-loan businesses.

They say the conversion to required direct lending is an unwarranted government takeover that will lead to the widespread loss of banking jobs, and poor service for students.

Push Came from Brin for Google's China Exit

The Wall Street Journal

Behind Google Inc.'s dramatic decision to shutter its China-based search engine this week was co-founder Sergey Brin's change of heart about the compromises required to do business in a land that was increasingly reminding him of his native Soviet Union.

The beginning of that change came just after the 2008 Summer Olympics in Beijing, Mr. Brin says in an interview about the China decision. As the glow of the Olympics faded, he says, the Chinese government began ratcheting up its Web censoring and interfering more with Google's business. Around that time, he says, the murky rules of doing business in China grew even murkier.

"China was ever-present," he says. "One out of five meetings I attended had some component that applied to China in a different way than other countries."



The 36-year-old co-founder says he was also moved by growing evidence in China of repressive behavior he remembered from the Soviet Union, which he and his parents fled when he was six years old. He says memories of that time—having his home visited by Russian police; the anti-Semitic discrimination against his father—emboldened his view that it was time to abandon Google's policy.

China has "made great strides against poverty and whatnot," Mr. Brin says. "But nevertheless, in some aspects of their policy, particularly with respect to censorship, with respect to surveillance of dissidents, I see the same earmarks of totalitarianism, and I find that personally quite troubling."

On Jan.12, Google said it would stop self-censoring its search engine in China, citing cyber-attacks it believes were motivated by an attempt to spy on Chinese activists' emails. On Monday, Google implemented that policy, routing mainland users of its search engine to a site in Hong Kong that the company wasn't censoring.

The cyber attacks were the "straw that broke the camel's back," Mr. Brin says. A heated debate in the company about whether to cease censoring ensued, say people familiar with the matter. Mr. Brin and other executives prevailed over Chief Executive Eric Schmidt and others who felt that Google ought to stay the course in China to continue to push its principles from the inside, say people familiar with the discussions.

"We did have a long conversation about it, several long conversations," Mr. Brin said. "We heard all the arguments." When asked if Mr. Schmidt and co-founder Larry Page were available for comment, a Google spokeswoman said Mr. Brin was speaking on behalf of the company.

What's next for Google in China is uncertain. Its business is in jeopardy. Some partners— like Hong Kong media company TOM Group Ltd—dropped their search agreements with Google, citing the need to abide by Chinese law. Employees are contemplating defecting to rival like Microsoft Corp., according to recruiters.

Beijing has called the move "totally wrong." Internet experts are skeptical that China will let Google continue to route traffic from its China site to Hong Kong. While Google isn't censoring that site, China's routine Internet filters are blocking some results for users in China.

Mr. Brin's doubts over Google's early agreement to censor in China hark back to his childhood in the Soviet Union, which he and his family left in 1979 to escape anti-Semitism. Mr. Brin was six, but he says he is reminded of the constant fear of surveillance through memories such as police visiting his family's apartment to question his parents after they made the decision to emigrate.

To this day, Mr. Brin says, he and his family often reflect on the significance of the move. His father, he says, wanted to be an astrophysicist, but because of ethnic discrimination became a mathematician. He relished the freedom to pursue "his own entrepreneurial dreams," he says. His father became a professor of mathematics at the University of Maryland.

China was a big test. Google was eager to be a player, hopeful that it could increase access to information and sensing new business opportunities.

Google set up a Chinese research-and-development center in 2005, and executives began to debate whether they should open up a search engine on Chinese soil—a move that would require them to filter out content ahead of time that they thought the Chinese government would deem objectionable.

Messrs. Brin, Page and Schmidt agreed that launching a search engine—and putting a disclosure on the site saying that some information had been removed—would generate awareness among Chinese Internet users that information was being restricted.

In late 2008, just after the Beijing Summer Olympic games, the censoring took a turn for the worse, Mr. Brin says. Chinese authorities also began to tell Google it needed a number of additional licenses to operate its business, according to people familiar with the requests.

Last year, Google SEO was further hamstrung when Beijing accused it of having too much pornography on its site and forced Google to disable some features for a period. Google's YouTube video service, which China had blocked periodically over the years, became inaccessible in the country.

Mr. Brin says Google was still evaluating its options when it discovered it was struck by a highly sophisticated cyber attack in late 2009.

After Google discovered evidence that the motivation of the attacks was to peek at the emails of Chinese activists, Mr. Brin says, he had had enough—it was the last straw.

"Ultimately I guess it is where your threshold of discomfort is," Mr. Brin says. "So we obviously as a company crossed that threshold of discomfort."

As for China, Mr. Brin says Google is reviewing its businesses, including the ones it still hosts in China like maps and its music search service. "We have stepped into a new world and will be looking at all the services," he says.

And he is still holding out hope for more radical end-game. "I certainly hope that the long-term solution is the liberalization of the Internet in mainland China," he says.