Financial Impact – Entering the Superproject Void

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THINKING BIG The Golden Gate Bridge under construction in 1937, when an era of huge public works projects was under way.

By LOUIS UCHITELLE

Generation after generation, giant public works projects have altered the American landscape. The Erie Canal and the transcontinental railroad come to mind. So do massive urban sewer and sanitation systems, the Tennessee Valley Authority, rural electrification, the Hoover Dam, the Interstate System, the subway networks in San Francisco and Washington, the Big Dig in Boston … and the list abruptly stops.

For the first time in memory, the nation has no outsize public works project under way. The Big Dig, with its three and a half miles of underground highways channeling traffic beneath downtown Boston, was completed in December 2007, the month the Great Recession began.

So what are we missing, exactly? Huge public works — or more precisely, their historic absence — didn’t cause the recession any more than their renewal would quickly draw the country out of it. But their effect on the economy is almost always noticeable if not easily measured. Some economists argue that the continual construction of new megaprojects adds a quarter of a percentage point or more, on average, to the gross domestic product over the long term. Again, cause and effect aren’t clear, but the strongest periods of economic growth in America have generally coincided with big outlays for new public works and the transformations they bring once completed.

If their absence creates a void, particularly in a recession, what can fill it?

There is the quick-fix approach: stimulus. Giant public works projects take time to plan, cost lots of money and — the real sore spot for some — tend to add to taxes and deficits, regardless of how many people they might put to work for generations. Mindful of these political realities, President Obama has earmarked just $80 billion — a tenth of his stimulus package — for megaprojects, and put off most of that down payment until next year. His focus instead has been on spending hundreds of billions to quickly and visibly repair existing public works, especially highways, and also levees, dams and locks, particularly in the New Orleans area. That’s not a bad thing — those repairs are certainly needed — but it doesn’t create permanent wealth.

Another approach is to finance new projects several notches smaller in cost and boldness — and in contribution to economic growth. Denver and Salt Lake City, for example, are extending light rail and bus lines into the outlying suburbs, at a cost of less than $5 billion apiece. In New York, construction of the Second Avenue subway proceeds unhurriedly. All three projects, once finished, will bring new commercial activity to the communities they serve. Over time, the additional tax revenues from these activities will pay down the debt incurred in the construction. That has been the financial justification for many public works projects since World War II.

By the standards of the past, however, they are not the spectacular feats of engineering and ingenuity that greatly enhance the economy. The Erie Canal was just such a feat, linking the western frontier with East Coast markets. So was the transcontinental railroad, connecting the West Coast with Omaha and the existing Eastern railroads, spawning towns and commerce along the new Western route. Several generations later, the interstate highways were built by the states, mainly with federal money and federal planning, giving the auto and trucking industries a huge lift.

“The public works projects that have the largest effect on economic growth are those that integrate markets in different areas of the country,” said Francisco Rodriguez, director of research at the Human Development Report Office of the United Nations and author of a recent study on the role of infrastructure investment on economic growth.

If there is anything in the Obama administration’s approach that can be compared to the megaprojects, it would be the giant computer system, now being planned, to make health records available in hospitals and doctors’ offices across the country. Some economists argue that computerized records would raise economic output just as the Hoover Dam did 73 years ago. Still, only $19 billion has been set aside; the project is expected to cost nearly $100 billion, and who knows if the funding will materialize.

“Last year at this time we were debating whether we should be concentrating our spending on big projects that, in the long run, add to economic growth,” said John J. Wallis, an economic historian at the University of Maryland. “That debate never got resolved, and the stimulus bill we enacted in February ended up focused instead on quick spending.”

Absent a groundswell of public demand, those advocating large-scale projects are not widely heard. Gov. Edward G. Rendell of Pennsylvania, a Democrat, is perhaps the most outspoken.

“Just think about a high-speed rail system for the country,” the governor said, envisioning in particular a system that would link Philadelphia and Pittsburgh. “Think what it would mean for steel factories, concrete factories, asphalt factories, electrical equipment factories. It would mean a massive amount of orders and a lot of economic growth.”

Mr. Obama has allocated just $8 billion as a down payment for high-speed rail — in Mr. Rendell’s view not a drop in a $3 trillion bucket, a bucket that seems unlikely fill anytime soon. “I think we should get private capital involved,” he said, noting that the private sector has often in the past participated in the financing of big projects that in the long run benefit business.

Economists in the Obama administration acknowledge that when it comes to giant public works, the president has not yet gone far, but they suggest that he could be seen as having accomplished as much as Franklin Roosevelt did in 1933. Roosevelt, however, took office that year in the depths of the Depression. As a response to the crisis, public spending on megaprojects multiplied, and the effect remains: many of today’s post office buildings, for example, were built in that era, speeding up mail delivery; and thousands of miles of dirt roads were paved.

Mr. Obama’s Great Recession, by contrast, has been a milder affair, and a recovery appears to have started, even without the softening effects of megaprojects. If the recovery materializes, government investment in such large-scale efforts is likely to run up against an opposition that has prevailed since the late 1970s, when government came to be seen as inefficient — a second-string alternative to the private sector. Adding to the skepticism, many economists and policy makers reversed a view they once held — that rising output would generate enough additional tax revenue to pay down the national debt, including debt connected to megaprojects.

Now at least some in the administration have come to believe that megaprojects have value. Jared Bernstein, chief economist for Vice President Joseph R. Biden Jr., said, “We are on the eve of making truly significant and lasting down payments that are going to plant some lasting seeds.”

Aquarium volunteer lands at Revere High

Don Pinkerton started his new job as a teacher at Revere High School about a year after he was laid off from a financial services firm.

The 51-year-old Swampscott resident used his time and some well-known local resources to reinvent himself. And today he said he feels fortunate to have weathered a difficult situation.

“I know a lot of people are really struggling, and I have friends who are looking for work, so I know how hard it can be,” he said.

Pinkerton said it was solid support from his family and some money that he had saved up for emergencies that gave him the time to execute a career transition.

There was also a valuable stop at the New England Aquarium.

“It was a great experience,” he said of the days he spent assisting visitors at the bustling Boston institution. “I realized I really like being in a science-oriented environment, and I really enjoyed helping to educate people.”

Pinkerton wasn’t paid for his time, but it was rewarding nonetheless. At the aquarium he realized he could thrive as a science teacher.

Aquarium officials say the past year has brought them a 15 percent to 20 percent increase in new volunteers. In 2009, about 100 more volunteers worked 11,000 more hours than in 2008.

“We have experienced a lot more interest due to the economy,” said Mona Chang, the aquarium’s manager for volunteer programs. “People have more time because many of them have lost their jobs.”

Pinkerton majored in a science in college, then spent 25 years in finance. The December 2008 separation agreement he signed with his former employer prohibits him from speaking about the firm.

“I was happy most days and I was paid well,” he said. “The work was challenging, but it was never really me.”

The layoff was a wake-up call of sorts.

In addition to volunteering at the aquarium, Pinkerton helped out at the Museum of Science, took graduate-level science courses at Salem State College, worked as a substitute teacher and received a state teaching certification.

This past December he landed his dream job, teaching biology at Revere High School.

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1231184

Budgeting is back in vogue, and these websites make it easier

By Kimberly Blanton, Globe Correspondent

Buyer’s remorse hit Scott Schulthess minutes after he flipped open his laptop at a Cambridge coffee shop to review his spending habits last year on PearBudget.com.

“This makes me feel bad,’’ said the 26-year-old computer programmer, focusing in on his June purchase of an iPhone, displayed in his online account on the budget-tracking website. On impulse, he bought the new phone rather than repairing his old one. “Basically, a waste of $400.’’

In tough economic times, more and more people are flocking to budget-tracking websites – Pear Budget, Mint.com, money.Strands.com, Wesabe.com, and JustThrive.com – that give users a sense of where they’re actually spending their money each month. Some budget-tracking sites are even rolling out new features such as iPhone applications, Twitter alerts, and Spanish-language options as they compete more fiercely for customers. Personal finance websites, ranging from budget trackers to financial blogs, are becoming increasingly popular and now attract one in four people who use the Internet, according to Comscore.com, which tracks Web traffic.

“There’s been a profusion of these things, in part because of what’s going on in the broader economy,’’ said Paul Kedrosky, who writes an economics blog in San Diego called Infectious Greed. “People feel they have to be more frugal, so budgeting’s in vogue.’’

These budget-tracking websites are becoming so popular that banks are now purchasing the software for their online customers so they can preserve crucial banking relationships. Budgeting software “is the future of online banking,’’ said Peter Glyman, a founder of Geezio, which sells the software to banks and credit unions.

The theory behind budget-tracking websites is that people often know their money disappears fast but they don’t know precisely where it goes. Seeing, in detail, where spending occurs is the first step to curbing it. To help users budget, these sites sort each expense into a fixed or customized category – rent, utilities, clothing, Starbucks, gym membership – and then compare actual spending to that category’s budget amount, specified by the user in advance. The sites’ colorful charts display whether users are under- or over-budget every month in each category.

A common realization by users of budgeting websites is how much they spend every month eating out, said Aaron Patzer, Mint’s founder and chief executive. Indeed, in a recent survey of Mint users, 90 percent said they changed their spending habits after using the budgeting software, and 40 percent said they cut back on dining out.

“Having the feedback and the awareness that you went to Starbucks 30 times last month changes peoples’ habits,’’ Patzer said.

Schulthess, the Cambridge resident, said he and his girlfriend started taking cooking classes so they could cut their food budget after Pear Budget showed he was spending $500 a month on dining out. Despite lapses like the iPhone splurge, he said Pear Budget helps him stick to his goal of saving 10 percent of his income. Schulthess said he’s saved about $200 per month on food alone.

“If you get laid off or wanted to change your job, you need financial security to be comfortable,’’ he said.

Budgeting websites are free to users, but some earn revenues each time they successfully direct users to financial products, such as credit cards, offered by advertisers, which some say implicitly encourages the use of credit to someone who may instead need to curb their spending.

The sites also differ in how they collect data. Some sites are automated budget trackers, which require users to provide their bank, credit card, IRA, and other account numbers and their online passwords. The budgeting site then uses this information as permission to receive a download of their spending and income data from the financial institution.

Mint, which extracts the data automatically, has emerged as the giant among the sites. With more than 1 million unique visitors per month, according to Compete.com, a website that tracks Internet traffic, Mint became so successful that it was purchased by financial software maker Intuit in September for $170 million. Intuit plans to replace the online version of its famous Quicken software with Mint’s more modern technology, the companies said. Wesabe, which also extracts data automatically, is the second-most-popular site for individuals, with more than 35,000 unique visitors per month.

But many potential customers, particularly older users, are uncomfortable with turning over their account information to a third party. To reach a broader audience, some budget sites are adapting. Money Strands, which was rolled out less than a year ago, offers manual and automatic data entry. Mint.com said that it also plans to offer manual data entry in coming months.

“Many people from all ages say, ‘I would never share that information,’ ’’ said Diane Ty, an AARP senior vice president and expert on personal finance.

Pros: Mint.com uses state-of-the-art software to extract a user’s financial information from bank accounts, credit cards, and other sources. Unlike some sites, it also tracks a wide range of financial activities, from IRAs to college funds. Other features include a weekly e-mail or text message listing user’s five largest expenditures. Slick, colorful graphics and an iPhone application are also appealing.

Cons: Requires users to turn over account passwords, though the company points out that it does not store users’ personal information – only data – or their passwords. Users report issues arise from downloading data from their bank or other accounts such as an inability to connect to certain financial institutions and glitches in categorizing some expenditures.

Final word: Mint.com is the granddaddy of budgeting websites. The site said that it is working to continually support more institutions.

Pros: Rolled out less than a year ago and in use at a major Spanish bank, the budget-tracking website has features older sites lack, including a Spanish-language capability, iPhone app, advanced data analysis, and support for 44 currencies. Key distinction from other sites: automated data extraction, like Mint, but also a manual capability for those leery of turning over bank account information to third parties.

Cons: The newest of the budget-tracking sites is still working out the kinks and responding to user comments and complaints. Does not integrate investment accounts.

Final word: The jury’s out. But Atakan Cetinsoy, vice president of personal finance products, said the company is serious about creating a website that strikes the crucial balance between simplicity and usefulness. An “obvious next step’’ is to integrate users’ investment accounts, he said.

Pros: Popular because it’s really easy to use and simplifies for people who may be overwhelmed by budgeting. Founder responds personally to users’ questions.

Cons: No automated data download – only manual expense and income entry is allowed by the software.

Final word: Created by Charlie and Sarah Park in 2004 and still run out of their Williamsburg, Va., home. Park said he remains true to his original mission of helping people, providing personal service, and creating a homey feel.

Pros: The best site for people who seek the emotional encouragement of an online support group to discuss financial issues or solicit solutions to problems such as debt overload. Offers suggestions for low-cost retailers in the user’s neighborhood. Has iPhone and other smartphone apps. User complaints and questions are visible to all – not just members who log in.

Cons: Advice from third parties can be unreliable. Users complain that responses to requests for Web support have slowed, and the company agrees it is running behind. Automated data extraction only.

Final word: The four-year-old company is one of the most popular sites – 37,500 unique visits per month – and suffers from some growing pains. Customer support has slowed but remains a priority: Founder and chief executive Marc Hedlund responds personally on the site to users with complaints and questions.

Pros: Cool feature allows users to designate a specific savings goal and track progress toward that goal. The site also provides education or guidance about how to reach goal.

Cons: Automated data extraction only. Budget tracker also can be accessed via MoneyRight.com in the wake of acquisition by Lending Tree.

Final word: For those who find it hard to take directions via e-mail or Twitter, JustThrive is a great bet. It provides good customer service over the phone, which is important for serious budget trackers who aren’t Web whizzes.

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The New York Times Company

Mo Vaughn’s home runs

By Amanda Fung

Published: February 14, 2010 – 5:59 am

Mo Vaughn (right) and Eugene Schneur revitalized a drug-infested five-building complex in Brooklyn, and made it a decent place to live. Photo by Buck Ennis.

Six months after Mo Vaughn set up Omni New York in 2004, the fledgling real estate firm struck, snapping up a 286-unit affordable housing complex in the Bronx. By the end of its second year, Omni New York had tripled its holdings to a total of 869 units.

As far as most people were concerned, however, Mr. Vaughn was still a Mets first baseman, even though his baseball career ended in 2003.

“I wanted people to take us seriously and know that we were the real deal,” says Mr. Vaughn, who is seated at a Brooklyn eatery with his partner, Eugene Schneur, explaining his transition from baseball hero to real estate mogul—albeit one whose new uniform includes not just sharply tailored suits but large diamond-encrusted hoop earrings. “I wanted respect.”

These days he’s got it—not as the American League’s former MVP but as the managing director of one of the city’s best-regarded and most active buyers and managers of affordable housing. Along the way, Mr. Vaughn and company have earned a place as one of the city’s top choices for turning around distressed residential properties.

Today Omni ranks as a midsize firm capable of competing with the bigger players, swallowing up sprawling properties such as the decrepit 14-building, 416-unit complex in the South Bronx that Omni bought the mortgage on at a foreclosure auction—with the city’s blessing—in December. “Given their track record, they are ideally suited to deal with troubled projects,” says NYC Housing Preservation and Development Commissioner Rafael Cestero.

Since 2004, Omni has spent over $500 million buying and rehabilitating 21 affordable-housing buildings with a total of nearly 3,500 units in the Bronx, Brooklyn, Long Island and as far away as Wyoming. The majority of the buildings they own and manage are Section 8 buildings, whose low-income tenants rely on federal vouchers to help pay their rent. Omni finances its deals using tax-exempt bonds and the proceeds from the sale of low-income-housing tax credits.

Making money and doing good

That is exactly what it did when it acquired the Noble Drew Ali Plaza in the Brownsville section of Brooklyn—the 2007 deal that put Omni on the map. At the time, the five-building complex with 358 units was a haven for drug dealers and addicts, its hallways urine-soaked and graffiti-lined and its apartments crumbling.

Omni purchased the property out of bankruptcy for $23 million with financing from various city agencies, including HPD, as well as federal grants. The developer then poured $25 million into refurbishing everything from new elevators and energy-saving appliances to 326 security cameras. After two years of work, Messrs. Schneur and Vaughn capped off the revitalization by giving the complex a new handle: “The Plaza.”

“Noble Drew Ali, without a doubt, was one of the most complicated projects [we've seen],” says Mr. Cestero. “They restored it to a quality place for people to live by taking a very aggressive approach to renovating buildings.”

Today Mr. Vaughn, who played for the Boston Red Sox in the 1990s, spends most of his time on the operations side of the business, working with Omni’s construction, management and maintenance teams, while Mr. Schneur focuses on the dealmaking.

“I’m the eyes,” said Mr. Vaughn, who got his start in real estate by investing in Manhattan nightclubs with help from Mr. Schneur, then his attorney. “I make sure that everything that needs to get done gets done.”

In fact, Omni was his idea. In Ohio, where Mr. Vaughn spent his off-seasons, he met a developer successfully buying affordable housing using tax credits and decided to try the concept out in New York.

“They are smart people,” says Lisa Gomez, executive vice president of affordable housing developer L+M Development Partners. “They get how to do affordable housing and look to the double bottom line [of making money and doing good].”

Size doesn’t matter

But competition for distressed properties is increasing as the drought in luxury housing deals drags on. Meanwhile, the price of tax credits—a key currency in such deals—has plummeted by nearly a third, forcing Omni to scramble for more state and city subsidies to fill the gap.

“We used to be able to get deals done without subsidies,” says Mr. Schneur.

Omni’s rapid growth also presents challenges. By year’s end, it expects to have close to 5,000 units. For a firm whose two founders visited their early holdings as many as four times a week, the sheer scale of the portfolio now makes maintaining that degree of oversight difficult—even with the aid of a staff at its midtown headquarters that now numbers about 120.

“We can’t cut corners and be complacent,” says Mr. Vaughn. “If we continue to be humble and work hard, we will be fine.”

In fact, Mr. Vaughn and his partner are stepping up their act. Prior to the market collapse, Omni had been priced out of Manhattan. Mr. Schneur recalls one deal where Omni bid $20 million for a Manhattan building that went for $30 million.

Last month, Omni had better luck, buying its first Manhattan properties—two Section 8 buildings in Harlem with 53 units—for $5.5 million. Now, as a number of big, financially troubled properties, including Lawrence Gluck’s 1,230-unit Riverton in Harlem, make their way through foreclosure, they are weighing a bid. Even Manhattan’s vast middle-income oasis Stuyvesant Town-Peter Cooper Village looms as a potential target.

“Size doesn’t matter,” says Mr. Vaughn. “They fit within our philosophy of preserving decent affordable housing.”

Consumers Head Online for Local Business Information

By Gregg Stewart

It’s time for the release of TMP Directional Marketing & comScore’s Annual Local Search Study results.

Before we dive into the data, full disclosure: I preside over an interactive division at TMP.

ComScore has administered the study each of the last three years with the purpose of identifying media trends and consumer behavior relative to local search. Trending data provides good insights on how this has changed over those three years.

The study is comprised of two components: an online questionnaire completed by 4,000 respondents and a behavioral component courtesy of comScore’s more than 2 million users. The behavioral component is especially interesting because it provides direct observation of actual local search behaviors.

And Now, the Results…

Year over year, more digital channels become available to more consumers. So it’s no surprise that they’re increasingly being relied on for local business information. Search engines remain the “primary source” of information, while print media usage continues to decline.

Also on the decline is the number of local business searchers who own print directories. In 2009, this represented 84 percent of searchers, down from 89 percent in 2008. Print yellow pages (PYP) usage may be down, but Internet yellow pages (IYP) usage is up, possibly from loyal PYP users migrating online.

The rise of online media as a local business resource is expected. Also expected is the survival of offline media. There is still significant usage.

This illustrates the need for a diversified approach toward media investment in order to nurture maximum lead flow. This is especially true if you’re targeting mature adults (45 years and older). Offline media is still their primary local business resource, 40 percent prefer print directories while only 24 percent prefer search engines.

To understand usage declines, and also identify growth opportunities, it’s helpful to look at the frequency with which media is used.

For example, in the previous graph social media and mobile as “primary sources” of local business information represent 1 percent and 3 percent respectively — not something to get really excited about. However, consider that consumers use them every day or a couple times a week and you begin to take them more seriously (see below chart). Frequency indicates growing reference activity, and in this case it’s a reason to keep emerging advertising opportunities in social and mobile channels on your radar.

Google Maps: Number 1 with a Bullet

Google made significant gains in its share of local searches. Google Maps usage grew from 15 percent market share in the fourth quarter of 2008 to the number one local search site in the second quarter of 2009 with 24 percent market share, according to the comScore IYP/Local Combo Report.

click to enlarge

Interestingly, the ascension of Google Maps usage almost directly corresponds with the transition from what was the 3-Pack last spring to what’s now the 10-Pack. Also exacerbating this trend is Google’s use of implicit searches early in 2009. This illustrates the need for national and local businesses to claim their local business listings, and also to ensure that they’re accurate.

Importance of Ratings and Reviews

From 2008 to 2009, usage of consumer ratings and reviews increased to 25 percent (+3) among IYP searchers and to 27 percent (+5) among general searchers. Additionally, people who use social networking sites for local business information are more likely to use consumer reviews (53 percent).

It’s interesting that, while overall usage of ratings and reviews is only 24 percent, its importance during the business selection process is 57 percent! Because users of ratings and reviews heavily rely on them to select a company to do business with, they should be a serious component of any marketer’s online strategy.

2010 Will be the Year of Mobile

Just kidding, it’s still a few years out. The data reveals that mobile search continues to grow as more consumers have access to smartphone devices. Sixty percent of smartphone users say they have conducted a local search on their phone, versus 19 percent of standard cell phone users that have data connection.

According to comScore, only 12 percent of the mobile devices in today’s marketplace are smartphones. As consumers upgrade their existing devices, we should begin to see the mobile segment become more important to local search.

In closing, a greater percentage of local business searchers expect business results to be within 15 miles from their starting location (63 percent, from 52 percent in 2007). Marketers already leveraging local search know this and have seen its benefits: leads that convert both online and offline.

Super Bowl 2010 commercials featured (again) on YouTube AdBlitz

Would marketers be smarter to take the money they’ll spend on Super Bowl 2010 commercials and use it to by YouTube ads instead?

Image by SESConferenceSeries via Flickr

Last year, the Super Bowl ranked in $213 million in advertising revenue, according to Kantar Media, until recently known as TNS Media Intelligence.And, for many marketers, that was money well spent. According to Nielson Company, the 2009 game was the most-watched Super Bowl ever, with 98.7 million viewers watching the Pittsburgh Steelers beat the Arizona Cardinals.

But, according to comScore Media Metrix, 128.1 million viewers watched more than 12 billion videos on YouTube.com in November 2009. This means that more Americans visit YouTube each month than watch the Super Bowl.

Oh, and according to a variety of sources, marketers are paying between $2.5 million and $2.8 million for a 30-second spot.

What’s a YouTube homepage masthead unit cost? Well, YouTube doesn’t publish its rate card. And homepage ads come in a variety of formats. But, knowledgeable sources say it costs hundreds of thousands of dollars to take over the YouTube homepage to reach tens of millions of viewers with an expandable masthead ad.

Now, YouTube doesn’t attract an audience of 128.1 million viewers each and every day. So, comparing YouTube’s monthly audience with the Super Bowl’s daily audience is comparing apples to oranges.

But, four YouTube homepage mastheads delivered 141 million impressions for the Las Vegas Convention and Visitor’s Authority’s “Vegas Bound” campaign last year. So, advertisers know how to compare apples to oranges.

I talked with Aaron Zamost of Google Corporate Communications this week, hoping to stir up a little partisan controversy between offline and online advertising.

Zamost was in Washington, D.C., which knows all about partisan controversy. But, it appears that President Barack Obama’s request to be more bipartisan was heard by YouTubers — because Zamost reached across the aisle to CBS instead of bashing broadcast TV.

He noted that YouTube AdBlitz 2010 would let YouTubers watch the Super Bowl commercials the minute they air on Sunday, February 7. When the game ends, YouTube will let visitors vote for their favorite 2010 commercial until February 14. And the winning ad will receive ultimate video glory with YouTube homepage recognition.

Zamost also said that smart marketers have already figured out that their target audience is coming to the Internet to view Super Bowl ads. So, they are building up to the big game with behind the scenes campaigns — like KiaSorento’s channel, which provides a sneak peak of Kia’s first big game commercial, which stars the all-new 2011 Sorento and an unbelievably colorful cast of characters.

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Walmart’s Project Impact: A Move to Crush Competition

Walmart loves to shock and awe. City-size stores, absurdly low prices ($8 jeans!) and everything from milk to Matchbox toys on its shelves. And with the recession forcing legions of stores into bankruptcy, the world’s largest retailer now apparently wants to take out the remaining survivors.

Thus, the company is in the beginning stages of a massive store and strategy remodeling effort, which it has dubbed Project Impact. One goal of Project Impact is cleaner, less cluttered stores that will improve the shopping experience. Another is friendlier customer service. A third: home in on categories where the competition can be killed. “They’ve got Kmart ready to take a standing eight-count next year,” says retail consultant Burt Flickinger III, managing director for Strategic Resources Group and a veteran Walmart watcher. “Same with Rite Aid. They’ve knocked out four of the top five toy retailers, and are now going after the last one standing, Toys “R” Us. Project Impact will be the catalyst to wipe out a second round of national and regional retailers.” (See 10 things to buy during the recession.)

Though that’s bad news for many smaller businesses that can’t compete, Walmart investors have clamored for this push. Despite the company’s consistently strong financial performance, Wall Street hasn’t cheered Walmart’s growth rates. During the 1990s, the company’s stock price jumped 1,173%. In this decade, it’s down around 24% (Walmart’s stock closed at $51.74 per share on Sept. 3). “Walmart is under excruciating pressure from employees and frustrated institutional investors to get the stock up,” says Flickinger. (Read “Can Toys “R” Us Sell Toilet Paper?”)

Many analysts believe that the store-operations background of new CEO Mike Duke will keep investors quite happy. Though the recession finally caught up to Walmart last quarter, when the company reported a 1.2% drop in U.S. same-store sales, Walmart was a consistent winner during the worst days of the financial crisis, as frugal consumers traded down. While most retailers are shutting down stores, Walmart has opened 52 Supercenters since Feb. 1. Joseph Feldman, retail analyst at Telsey Advisory Group, estimates that each store costs Walmart between $25 and $30 million. In order to continue the momentum that it has picked up during the retail recession, over the next five years the company plans to remodel 70% of its approximately 3,600 U.S. stores.

So what does a Project Impact store look like? One recent weekday afternoon I toured a brand new, 210,000-sq.-ft. Walmart in West Deptford, N.J., with Lance De La Rosa, the company’s Northeast general manager. “We’ve listened to our customers, and they want an easier shopping experience,” says De La Rosa. “We’ve brightened up the stores and opened things up to make it more navigable.” One of the most noticeable changes is that Project Impact stores reshape Action Alley, the aisles where promotional items were pulled off the shelves and prominently displayed for shoppers. Those stacks both crowded the aisles and cut off sight lines. Now, the aisles are all clear, and you can see most sections of the store from any vantage point. For example, standing on the corner intersection of the auto-care and crafts areas, you can look straight ahead and see where shoes, pet care, groceries, the pharmacy and other areas are located. And the discount price tags are still at eye level, so the value message doesn’t get lost. (See how Americans are spending now.)

“They are like roads,” De La Rosa says proudly. “And look around, the customers are using them. We’ve already gotten feedback about the wider, more breathable aisles. Our shoppers love them.”

The layout is also smarter. “You can kind of guess where everything is going to be,” says Sharon Tilotta, 73, a shopper in the West Deptford store. The pharmacy, pet foods, cosmetics and health and beauty sections are now adjacent to the groceries. In the past, groceries and these other sections were often at opposite ends of the store, which made it more difficult for someone looking to pick up some quick consumables to get in and out of Walmart. “Under Project Impact, Walmart is providing more of a full supermarket experience within its walls,” says Feldman. “The biggest complaint against them has always been that it takes a long time to get through everything. This definitely improves efficiency.” De La Rosa also points out the party-supply section. Favors, wedding decorations, cards and scrapbooks are all in one area. “In the past, these products would be in three different places,” he says.

And although Walmart won’t admit to targeting specific competitors – “We’re just listening to what our customers want,” De La Rosa says – it’s clear that, under Project Impact, Walmart will make major plays in winnable categories. The pharmacy, for example, has been pulled into the middle of the store, and its $4-prescriptions program has generated healthy buzz. With Circuit City out of business, the electronics section has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael’s Stores, the country’s largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity. Stores are chock-full of scrapbooking material, baskets and yarns. “Look, they’re selling the stuff that accounts for 80% of Michael’s business, at 20% of the space,” says Flickinger. “It’s very hard for any company to compete with that.” (Read “That Viral Thing: People of Walmart.”)

Apparel, one of Target’s traditional strengths, gets a prominent position at the center. The color palettes of the shirts and dresses are brighter and more appealing than they’ve been in the past. “Walmart has figured out fashion for the first time in 47 years,” Flickinger says. “They’ve gone from a D to an A-minus.” Briefs and underwear have been shuttled to the back. “That’s a smart move,” Flickinger says. “People know to come to Walmart for the commodity clothing. Now, they have to walk past the higher margin, more fashionable merchandise to get what they need.”

Of course, Project Impact isn’t perfect. You’d think that if Walmart was going to open a massive new store with a cutting-edge layout, the company would at least put a sign up. In West Deptford, it’s easy to miss the entrance to the Walmart – which is buried in the back of a parking lot – while driving along a main thoroughfare. And of course, customers will always nitpick. One elderly shopper complained about a shortage of benches in the store (she needed a rest). Another had a more esoteric, yet legitimate, gripe. “Their meat is leaky,” says Jeff Winter, 30, a West Deptford shopper. “And instead of giving you a wet wipe to clean it off, they give you a dry towel. How’s that going to prevent E. coli or whatever?” (See which businesses are bucking the recession.)

What analysts really want to see from Project Impact, however, is a faster pace of implementation. “The biggest hurdle facing Walmart is the speed with which they can roll this out,” says Feldman. As more Project Impact stores pop up, the existing stores appear worse by comparison. For example, while the merchandise at the Project Impact store outside of Philadelphia really speaks to that particular market – there’s tons of Eagles and Phillies gear – at one regular discount store outside New York City, Minnesota Twins and Seattle Mariners pajama pants wasted away on the racks. There were plenty of associates staffing the electronics section at the Project Impact store; at the discount store, five frustrated shoppers waited in line for help from a customer-service rep. Soon, it was closer to 10.

What about the friendly service? In West Deptford, the associates were sunny and bright. At the New York–area discount store, not so much. “You’ll notice we’ve been in the store for two hours, and no one has even said hello to us,” Flickinger says after he and I toured that store. He’s right, we weren’t feeling any love. But if Project Impact keeps picking up momentum, many more Walmart salespeople, and shareholders, should be smiling.

View this article on Time.com

Freelancers bag cheap office space

Photo by Christopher Evans

Three or four days a week, Boston-area entrepreneur Hooman Hodjat stops into a second-floor office just across the street from Boston’s South Station.

One day, he’ll use the conference room to meet with potential investors. The next day, he may be found at a table, working the phone lines, with a fresh cup of coffee in hand.

And for all this, he pays just $100 a month.

He’s a member at WorkBar, a pioneering new business that offers office space, like a gym offers exercise space.

Hodjat and other WorkBar members sign up, pay monthly dues and come in as often as they want to work.

Instead of treadmills and free weights, WorkBar has laptop charging stations, lounges and free coffee.

WorkBar director Bill Jacobson said the concept evolved after he realized that today’s offices don’t reflect today’s workers.

“The people who are working at home say they miss the other people from the office,” he said.

So far, WorkBar, which officially launches next month, offers two types of memberships. Community members pay $100 a month and must sign on for a six-month commitment. They get to use almost all the services, except the private desks, which are set aside for dedicated members, who pay $400 a month.

The 129 South St. shop is open Monday through Friday, 8:30 a.m. to 5:30 p.m.

And at least three days a week, Hodjat is there.

He is one of the founders of Pickup Zone, a new service aimed at offering consumers relief from unattended package deliveries. With PickUp Zone, people can have their packages delivered to a neighborhood retailer, who will hold them until the person can pick them up.

As a result, Hodjat said, he’s often in the city, meeting with retailers and potential clients.

The convenience is great, said Hodjat, who lives in Framingham.

“My target market is in the city, so I get on the commuter rail, get out at South Station, and walk across the street for my meetings,” he said.

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1191126

Christy Mihos aide: ’Financial advantage’ key in 2010 race

BOSTON — The chief political consultant for Cape Cod businessman Christy Mihos said Tuesday his client lost the 2006 gubernatorial race solely because he ran as an independent.

Conservative commentator and author Dick Morris also predicted that Mihos will beat fellow Republican Charles Baker in the 2010 GOP primary and Gov. Deval Patrick, a Democrat, in the general election because of his opposition to Big Dig spending and the “considerable financial advantage” the multimillionaire brings to the campaign.

“I don’t think Baker is going to be a serious problem,” Morris told The Associated Press in an interview. “I think he’s subject to many of the same negatives that Patrick is. Patrick raised our taxes; Baker raised our tolls.”

The criticism harkened back to Baker’s work in the Weld and Cellucci administrations, when he served as the top finance official in the Cabinet from 1994 to 1998. During that time, the state sought to finance the $15 billion Central Artery tunnel project, which has triggered toll increases.

More recently, Patrick signed a 25-percent sales tax hike into law.

Yet Morris didn’t limit his attack there. He criticized Baker, who went on to become president of Harvard Pilgrim Health Care, for helping negotiate a state receivership for the troubled insurer and then taking a $1.5 million salary package from the now-profitable company until he resigned in July to run for governor.

“I wonder how popular health insurance companies are,” Morris said. “Let’s put it this way: I’d rather run a hedge fund.”

A Baker spokesman dismissed the complaints.

“Looks like Christy Mihos is back negatively attacking Republicans again,” Baker spokesman Andrew Goodrich said. “Christy’s negative campaign is one reason elected Republican officials from across the state are flocking to support Charlie Baker and see Charlie as our only hope to defeat Deval Patrick.”

Mihos garnered only 7 percent of the vote in 2006, when he squared off against Patrick and Republican Lt. Gov. Kerry Healey. The Christy’s convenience store magnate is running as a Republican this time around.

Mihos has hired Morris to develop strategy. He is a newspaper columnist and Fox News analyst who once served as Democrat Bill Clinton’s political adviser.

His work with Mihos is not the New Yorker’s first venture into Massachusetts politics. He previously ran Ed King’s successful campaign against Democrat Michael Dukakis, and also worked on state campaigns to limit property tax increases and elect William F. Weld as governor in 1990 and 1994.

Morris said Mihos’s candidacy will resonate with voters because he fought against cost escalation in the Big Dig project while a member of the Massachusetts Turnpike board of directors. The consultant also said Mihos knows how to cut government spending but won’t be afraid to spend his own money promoting his candidacy — perhaps as early as this fall.

He said Mihos lost 2 1/2 years ago only because he ran as an independent.

“It was a basic mistake to think that as an independent in a highly polarized, partisan year,” Morris said. “I think that people were not in the mood for a third choice.”

Article URL: http://www.bostonherald.com/news/politics/view.bg?articleid=1191857

Americans Renew Their Love for Cars — Online

By KEVIN HELLIKER

Anne Fleming felt deeply confident as a negotiator—except whenever she entered an automotive dealership, where research shows that women pay more for cars than men.

So last October the former apparel executive in Pittsburgh launched a Web site called Women-Drivers.com, which offers negotiating tips, as well as reviews of female-friendly dealerships. In just nine months, the site has received reviews from several thousand women car shoppers. “We’ve gotten enough feedback to start ranking the female-friendliest dealerships,” says Ms. Fleming.

Despite a historic drop in U.S. auto sales, Women-Drivers.com is just one of scores of new automotive Web sites being launched that cater to car enthusiasts. For consumers, the Internet is helping to solve some of the most confounding aspects of buying a car, from comparing prices and reading reviews to getting tips on bargaining tactics. And the plethora of new sites for automotive buffs appears to demonstrate that Americans’ love affair with cars is alive and well.

Even as U.S. auto sales have fallen by about 30% this year from a year earlier, more than 100 new auto-related Web sites have been launched, says research group Hitwise. That brings the total number of such sites to nearly 5,000, more than for all but a few other industries. Since 2005, the ranks of automotive writers have grown to 2,700 from 1,600, says Autowriters.com, a site that tracks car writers for the auto industry.

Purchasing-related auto sites have generally experienced declining readership this year. But many sites that offer news and commentary and reviews have grown. Magazine stalwarts like Car and Driver, Road & Track, Automobile and Motor Trend now operate online editions. Fast gaining in the battle for car-news junkies is Autoblog, a five-year-old site whose motto is, “We obsessively cover the auto industry.”

Sexy Auto Spokescougars

TheTruthAboutCars.com is one of a slew of new sites for car buffs.

Almost no niche is too small. Online auto publications are appealing to readers based on geography ( DriveChicago.com ), type of car ( HybridSUV.com ), ethnic identity ( Latinos.onwheelsinc.com ), gender and even sexual orientation. At Gaywheels.com , readers can learn which auto makers do and don’t offer domestic-partner benefits to employees, as well as which vehicles are most popular among gays. “Gay men are four times more likely to own a Volkswagen than the average customer,” says Joe LaMuraglia, founder of the site.

Demand for automotive sites is increasing. A J.D. Power & Associates survey found that in 2008 more than 75% of car buyers conducted online research before shopping, up from 70% a year earlier. The popularity of cars online helps explain why General Motors Co. this month announced a joint venture to sell new cars through eBay Motors, the most visited online automotive site.

Some online auto entrepreneurs have struck it big. Kristin Varela was a single mom working for a Denver human-resources firm when she set about searching for the ideal vehicle for busing around children. “The only reviews I could find were basically by car buffs writing for gear heads,” she says.

So in 2004 she launched Motherproof.com , which reviewed cars from a maternal perspective. Among her questions: Were the seat belts simple enough for young children to fasten? Did it have enough cup holders? Could a young mom look hot in it? How did the reviewer’s children like the car?

Motherproof.com drew such strong traffic that advertisers flocked to it. In 2007, the site was purchased by Cars.com , one of the Web’s biggest automotive destinations, which hired Ms. Varela as its full-time editor. Every week, auto makers deliver new test cars to the driveways of young moms around the country who write reviews for Ms. Varela.

Sites devoted to electric-car coverage are particularly popular. Lyle Dennis, a neurologist at NewYork-Presbyterian Hospital, was hardly looking for a new career two years ago when he launched GM-Volt.com , a site that follows the electric-car efforts of General Motors. An electric-car enthusiast, Dr. Dennis was merely planning to post the occasional press release or news development about GM’s battery-powered Volt, a car not due out until 2010.

Blogger by Night

But the site drew so much traffic that GM began inviting Dr. Dennis to Volt-related events and offering him exclusive interviews with its top executives. Advertisers began paying him for space on the site. And upon completing his daily duties, including treating victims of stroke, Dr. Dennis began making daily posts to the site. Last week, when GM Chief Executive Fritz Henderson announced that the Volt would travel 230 miles per gallon of gasoline in city driving, Dr. Dennis flew in for the press conference. “This Web site has just added a whole new dimension to my life,” he says.

Write to Kevin Helliker at kevin.helliker@wsj.com

Kennedy Death Cuts Broad Health Bill Odds, Hatch Says

By Nicole Gaouette

Aug. 30 (Bloomberg) — Congress is less likely to pass sweeping health-care overhaul legislation following the death of Senator Edward Kennedy, a leading Republican said.

“You’re not going to get this big, broad Democrat spending bill — you’re not going to get Republican support,” Senator Orrin Hatch, a Utah Republican and close friend of the Massachusetts Democrat, said on CNN’s “State of the Union” program.

Hatch said Kennedy’s status as Congress’s leading liberal often convinced Democrats they could support deals he had struck with Republicans. “That’s why Senator Kennedy was so important,” Hatch said. “I don’t know if another Democrat has the same clout in Congress.”

Expanding coverage to nearly 50 million uninsured Americans and lowering health-care costs was Kennedy’s life’s work, colleagues said, and is now President Barack Obama’s top domestic priority. Lawmakers failed to get health-care bills through Congress before the August recess. Obama, who is pushing lawmakers to overhaul a health-care system that accounts for about 18 percent of the nation’s economy, said Aug. 20 that “we’re going to get this done one way or another.”

Hatch said Kennedy provided deep experience on health care, united factions within the Democratic Party and worked well with Republicans.

Kennedy’s Work

“Kennedy could bring together all of the base groups of the Democratic Party,” Hatch said on ABC’s “This Week,” recalling that Kennedy worked on health legislation for more than three decades. “In every case, he fought as hard as he could, but when he recognized that he couldn’t get everything he wanted, he worked with the other side. If he was here, I don’t think we’d be in the mess we’re in right now.”

Kennedy’s illness meant he was absent from Congress for much of the past year, though his staff said he kept abreast of the health debate through frequent phone calls. Senator Christopher Dodd, the Connecticut Democrat who temporarily took over from Kennedy as chairman of the Senate Health, Education, Labor and Pensions Committee, told the panel that Kennedy was watching their debate on C-SPAN television and calling him daily to offer feedback.

Four of the five congressional committees with jurisdiction over health have passed bills that would cost about $1 trillion over 10 years. The Senate Finance Committee has stalled over a number of issues, including whether to create a government-run insurance plan, require employers to provide workers with insurance, and impose new taxes that could range from taxing the richest Americans to levies on generous health plans.

Public Plan

Not all Democrats support the idea of a public plan, which Obama has said would be his preferred way to generate more competition among health insurers. Louisiana Senator Mary Landrieu told CNN she would “tend not to” support a bill that included a public option. “I think we can do it without a public option,” the third-term Democrat said. “Hopefully we can keep working. That’s what Ted Kennedy would want us to do.”

John Kerry, now the senior Democratic senator from Massachusetts and a member of the Finance Committee, said he was confident a health-care bill would be passed and he urged Republicans to avoid being “bound by ideology.”

“When we get reality on the table we can have a good conversation,” Kerry said on the ABC program. “I believe we can do this. I think better judgment will prevail.”

Senate Bill

When the Senate returns in September, it will take up the bill the Senate health committee put together in July, Dodd said on NBC’s “Meet the Press.” He said the bill is “sitting there,” ready to be worked on with the Finance Committee.

“If we can get these bills together and sit down with each other, we can produce a strong, vibrant, vitally needed national health care legislation on accessibility, quality and affordability,” Dodd said.

Health-care costs now account for about 18 percent of GDP, according to the president’s Council of Economic Advisers, and are projected to rise to 34 percent by 2040.

“The country cannot afford this, Dodd said on CNN. “How we get there is the challenge before us.”

Senator Maria Cantwell, a Washington Democrat, said bipartisan cooperation on the issue was crucial. “Doing nothing and thinking that we’re going to get out of this expense is not an option,” Cantwell said on CNN’s “State of the Union.”

“Getting true competition into the system and giving consumers choice is what the Democrats and Republicans should be joining ranks on,” Cantwell said.

Democrats Alone

Democrats including Senator Charles Schumer of New York have said that if Senate Finance negotiators — three Republicans and three Democrats — can’t reach a deal by Sept. 15, Democrats may have to pass the bill on their own.

The majority party could use a legislative maneuver called reconciliation which allows the Senate to pass a bill with 51 votes instead of the 60 typically needed for controversial pieces of legislation.

During the August recess, Finance Committee Chairman Max Baucus convened meetings of the six senators on the committee who are working on a bipartisan compromise.

Any agreement they reach would have to be coordinated with a plan passed by the Senate HELP committee. The three House committees with jurisdiction over health will meld their bills together after lawmakers return from recess. The House and Senate bills would have to be reconciled before being voted on by both chambers.

Protests at Meetings

The Senate adjourned on Aug. 7 and will reconvene on Sept. 8. Many of the town hall meetings lawmakers held to discuss health-care during the recess were disrupted by protests.

Administration officials have urged lawmakers to honor Kennedy by getting health reform passed.

“The best possible legacy is to pass health reform this year,” Secretary of Health and Human Services Kathleen Sebelius said recently. “Hopefully every step along the way they’ll ask themselves ‘What would Teddy do?’”

Dodd said Kennedy’s death will push his colleagues to work harder at passing legislation.

“We don’t have the luxury of wallowing in our grief; we’ve got to get up and get this done,” Dodd said. “We’re going to roll up our sleeves and do what Teddy would have done and get health-care done.”

– With assistance from Jeff Plungis in Washington. Editors: Ann Hughey, Bill Schmick

To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net.

U.S. payment-card industry grapples with security

By Ross Kerber

BOSTON (Reuters) – Fresh details of large-scale cyber attacks against data processor Heartland Payment Systems Inc and supermarket chain Hannaford Brothers show the challenges facing the efforts of the U.S. credit-card industry to upgrade security measures.

While both companies say their computer networks met the tough new standards meant to prevent data breaches, Visa Inc said Heartland at least may have let its guard down.

The positions reflect broader disagreements in the industry, as squabbling between merchants and financial firms over technology and the cost of systems upgrades continues to impede progress, said Robert Vamosi, an analyst for California consulting firm Javelin Strategy & Research.

“They both need to fight fraud and they are fighting each other,” he said.

The financial stakes are getting higher. Fraud involving credit and debit cards reached $22 billion last year, up from $19 billion in 2007, according to California consulting firm Javelin Strategy & Research.

The security of consumer information came under renewed scrutiny on August 17 when a 28-year-old Florida man, Albert Gonzalez, was indicted along with two other unnamed hackers for breaching the computer networks of Heartland and Hannaford, both of which said they were in compliance with security requirements.

Those standards were set by a council that includes the world’s two largest credit card networks, Visa and MasterCard Inc; fast-food leader McDonald’s Corp; oil major Exxon Mobil Corp; and big banks Bank of America Corp and Royal Bank of Scotland Plc.

All these companies face rising costs linked to fraud and its prevention. Of the 275,284 complaints received last year by the government’s Internet Crime Complaint Center, 24,775 were tied to credit or debit card fraud, up from 13,033 in 2007 and 9,960 in 2006.

Yet some 5 percent of the largest retailers and restaurants still have not met compliance deadlines set in 2007, according to Visa.

Even companies that meet the standards could be vulnerable should they lower their guard, Visa security executive Ellen Richey said last spring in a speech critical of Heartland.

“It was the lack of ongoing vigilance in maintaining compliance that left the company vulnerable to attack,” she said in March.

Merchants, for their part, complain via trade groups like the National Retail Federation that Visa and MasterCard are asking them to pay more than their fair share for security upgrades.

Some retail executives also say Visa and MasterCard have been slow to adopt better encryption technology and cards with high-security computer chips because of the associated costs.

“I can’t even tell you how many sour, disgruntled calls I get from retailers,” said Gartner Inc technology consultant Avivah Litan, who also works with banks.

GOVERNMENT REGULATION?

At Heartland, Gonzalez was charged with stealing more than 130 million payment card numbers, a record. Previously the biggest such hacking case was at TJX Cos Inc, where federal prosecutors last year accused Gonzalez and others of conducting an electronic break-in starting in 2005 that companies said compromised as many as 100 million card numbers.

Gonzalez, who is awaiting trial, has pleaded not guilty to the charges related to TJX, which had not met security standards at the time of the data breach.

This time, prosecutors say Gonzalez and his co-conspirators penetrated Hannaford and Heartland’s systems in late 2007 with code known as “structured query language,” which the security standards require companies to protect themselves against.

They also charged the ring breached systems at convenience store operator 7-Eleven Inc, roughly in August 2007. The company said the breach only affected transactions at automated teller machines owned by a third party at some of its stores, and wouldn’t comment further.

A spokesman for Hannaford, a unit of Belgium’s Delhaize Group, said an audit unit of Verizon Communications Inc showed it met the security standards.

Heartland said through a spokesman that its systems had been checked by audit firm Trustwave of Chicago as recently as April 2008 — about four months after prosecutors say the hackers began their theft.

The security standards represent “the lowest common denominator and the bad guys have figured out how to get around some of the weaknesses,” the spokesman said.

A Verizon spokesman confirmed it had audited Hannaford and found it to meet the standards, but declined to elaborate. A Trustwave spokeswoman said the firm wouldn’t comment.

Security is critical to Heartland because it processes card payments for merchants, and its stock dropped sharply in the two months after the attack was discovered.

In response, Chief Executive Robert Carr has tried to reassure customers and stepped up calls for better data encryption.

Ultimately, should the payment card industry fail to get its act together, it could face more government regulation, said Cynthia Larose, an attorney at Mintz Levin in Boston.

“If the stakeholders cooperate, we would see much better security,” she said.

(Editing by Matthew Bigg and Gerald E. McCormick)

Kennedy’s Death Opens Up Succession Debate

A torch extinguished: Ted Kennedy dead at 77

HYANNIS PORT, Mass. – The greatest heights eluded Ted Kennedy over a lifetime of achievement and pain. No presidency. No universal health care, chief among his causes.

Instead, Kennedy built his Washington monument stone by stone, his imprint distinct on the Senate’s most important works over nearly half a century. He toiled across the Potomac River from the graveyard of his fallen brothers.

The last of the Kennedys who fascinated the nation with their ambition, style, idealism, tragedies — and sometimes sheer recklessness — Edward Moore Kennedy died late Tuesday night at 77. A black shroud and vase of white roses sat Wednesday on his Senate desk, which John Kennedy had used before him.

So dropped the final curtain on “Camelot,” the already distant era of the Kennedy dynasty.

The Massachusetts senator’s extended political family of fellow Democrats and rival Republicans, steeled for his death since his brain-tumor diagnosis a year ago yet still jarred by it, joined in mourning. Kennedy was the Senate’s dominant liberal and one of its legendary dealmakers.

Just last year he jumped into a fractious Democratic presidential nomination fight to side with Barack Obama, giving the Illinois senator a boost that had the air of a family anointment.

“For his family, he was a guardian,” Obama said Wednesday. “For America, he was a defender of a dream.”

The president, vacationing in Martha’s Vineyard, was awakened after 2 a.m. and told of Kennedy’s death. He spoke soon after with the senator’s widow, Victoria, and ordered flags flown at half-staff on all federal buildings.

Kennedy will be buried Saturday at Arlington National Cemetery after a funeral Mass in Boston, where Obama is to deliver a eulogy.

Kennedy will lie in repose at the John F. Kennedy Presidential Library and Museum in Boston before that.

Also buried at Arlington, the military cemetery overlooking the capital city, are John and Robert Kennedy; John Kennedy’s wife, Jacqueline; their baby son, Patrick, who died after two days, and their stillborn child.

To Americans and much of the world, Kennedy was best known as the last surviving son of the nation’s most glamorous political family. Of nine children born to Joseph and Rose Kennedy, Jean Kennedy Smith is the only one alive.

To senators of both parties, he was one of their own.

“Even when you expect it, even when you know it’s coming, in this case it hurts a great deal,” said Democrat Patrick Leahy of Vermont.

Politicians also calculated the consequences for Obama’s push for expanded health coverage. For several months, at least, Kennedy’s death will deprive the Democrats of a vote that could prove crucial for his signature cause of health reform.

His illness had sidelined him from an intense debate that would have found him at the core any other time. Conservative Sen. Orrin Hatch of Utah, his improbable Republican partner on children’s health insurance, volunteerism, student aid and more, said the Senate probably would have had a health care deal by now if Kennedy had been healthy enough to work with him.

“Iconic, larger than life,” Hatch said of his friend. “We were like fighting brothers.”

He was the last of the famous Kennedy brothers: John the assassinated president, Robert the assassinated senator and presidential candidate, Joseph the aviator killed in action in World War II when Ted was 12.

He lost his sister, Eunice Kennedy Shriver, less than two weeks ago, saw the bright promise of nephew John F. Kennedy Jr. end in a plane crash in 1999 and struggled with excesses of his own until he became a settled elder statesman.

Like Obama, Kennedy was a master orator. But the words that live for the ages seem to be those he uttered in tragedy or defeat.

Older Americans remember his eulogy of Robert Kennedy, when he asked history not to idealize his brother but remember him “simply as a good and decent man who saw wrong and tried to right it, saw suffering and tried to heal it, saw war and tried to stop it.”

Remembered, too, is his speech conceding the 1980 Democratic presidential nomination to the incumbent Jimmy Carter. “For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives and the dream shall never die,” he said.

By then, his hopes of reaching the White House had been damaged by his behavior a decade earlier in the scandal known as Chappaquiddick.

On the night of July 18, 1969, Kennedy drove his car off a bridge and into a pond on Chappaquiddick Island, on Martha’s Vineyard, and swam to safety while companion Mary Jo Kopechne drowned in the car. He pleaded guilty to leaving the scene of an accident; a judge said his actions probably contributed to the young woman’s death. He received a suspended sentence and probation.

Kennedy’s legislative legacy includes health insurance for children of the working poor, the landmark 1990 Americans with Disabilities Act, family leave and the Occupational Safety and Health Administration. He was also key to passage of the No Child Left Behind Education law and a Medicare drug benefit for the elderly, both championed by Republican President George W. Bush.

In the Senate, Republicans respected and often befriended him. But his essential liberalism marked him as a lightning rod, too. He proved a handy fundraising foil motivating Republicans to open their wallets to fight anything he stood for.

In 1980, Kennedy’s task of dislodging a president of his own party was compounded by his fumbling answer to a question posed by CBS’ Roger Mudd: Why do you want to be president?

“Well, I’m, uh, were I to, to make the, the announcement, to run, the reasons that I would run is because I have a great belief in this country,” he began.

It’s a question that all savvy politicians ever since make sure won’t catch them unprepared.

In his later years, Kennedy cut a barrel-chested profile, with a swath of white hair, a booming voice and a thick, widely imitated Boston accent. He coupled fist-pumping floor speeches with charm and formidable negotiating skills.

“I think that once he realized he was never going to be president — that that was not the legacy he had to follow — he really worked at becoming the best senator he possibly could,” Leahy said. “And he did.”

He was first elected to the Senate in 1962, taking the seat that his brother John had occupied before winning the White House, and he served longer than all but two senators in history.

Kennedy was diagnosed with a cancerous brain tumor in May 2008 and underwent surgery and a grueling regimen of radiation and chemotherapy.

He made a surprise return to the Capitol last summer to cast a decisive vote for the Democrats on Medicare. He made sure he was there again in January to see his former Senate colleague sworn in as president but suffered a seizure at a celebratory luncheon afterward.

His survivors include a daughter, Kara Kennedy Allen; two sons, Edward Jr. and Patrick, a congressman from Rhode Island, and two stepchildren, Caroline and Curran Raclin.

Edward Jr. lost a leg to bone cancer in 1973 at age 12. Kara had a cancerous tumor removed from her lung in 2003. In 1988, Patrick had a non-cancerous tumor pressing on his spine removed. He also has struggled with depression and addiction and recently spent time at an addiction treatment center.

___

Woodward reported from Washington. Associated Press writer Laurie Kellman in Washington, Philip Elliott in Oak Bluffs, Mass., and Bob Salsberg contributed to this report.

Consumer confidence soars

Sentiment reading increased to 54.1 in August, well above economists’ expectations.

Final weekend of clunkers program draws big crowds

EMILY FREDRIX / AP Business Writer

From Vermont to California, exhausted but appreciative car dealers watched their lots grow empty as crowds rushed to trade in gas guzzlers during the final weekend of the popular Cash for Clunkers program.

The hectic pace of the $3 billion rebate program accelerated in the final weekend, after the government announced the program would end at 8 p.m. EDT Monday, two weeks earlier than expected.

Adding to the urgency, some dealers had said they would stop Cash for Clunkers sales even earlier to make sure the government reimbursed them for the rebates — or because they didn’t have enough eligible cars left.

In the final hours, customers streamed in.

“We thought about it a couple weeks ago,” said Annette Palmer, 51, at Town and Country Honda in Berlin, Vt., on Saturday with her husband. They hoped to trade in a 1999 Jeep Grand Cherokee for a Honda CR-V.

“We kind of dragged our feet. Then we heard it was closing and we picked up our feet and ran,” she said.

Though short of some new models, such as the Ford Focus, Honda Civic, Toyota Corolla and Nissan Altima, many dealers were still selling as many cars as they could before Monday night’s deadline.

Standing outside one of his Hyundai dealerships in Appleton, Wis., John Bergstrom said customers traded in 100 clunkers throughout his fleet of 20 dealerships on Saturday and 100 the day before. They were his two biggest sales days during the clunkers program.

“That’s about as good as it gets,” Bergstrom said. “It’s going out with a bang.”

In all, Bergstrom said his dealerships — whose brands include Ford, GM and Toyota — sold 800 cars during the program, boosting sales 30 percent. He had to bring in extra staff to deal with the paperwork, but the sales were worth the hassle, Bergstrom said.

At Universal City Nissan in Los Angeles, Alberto Vasquez said keeping up with the pace of the program has taken a toll on employees. Some labored past midnight to wrap up last-minute deals.

“Are we tired? Definitely,” said Vasquez, the dealership’s director of training. “But it’s also bittersweet, because we’re happy that we’re selling cars.”

The dealership has sold more than 700 vehicles through the program and brought in extra staff to help enter information on the government’s reimbursement Web site.

Cash for Clunkers has been wildly successful in spurring new-car sales and getting gas-guzzling models off the road, though some energy experts have said the pollution reduction is too small to be cost-effective. Customers receive rebates of between $3,500 and $4,500, depending on the improvement in fuel efficiency from their old vehicle to their new one. As of early Friday, nearly half a million cars had been sold through the program.

But the new sales left many dealers worried about not being reimbursed by the government. As of Friday, dealers had been reimbursed for just a small fraction of the billions in sales.

Some dealers chose to stop participating over the weekend so they could have enough time to process and file the paperwork, including AutoNation Inc., the nation’s largest auto dealership chain.

At Toyota Direct in Columbus, Ohio, employees were told to double- and triple-check paperwork so it wouldn’t be rejected for reimbursement, said Jim Collins, the dealership’s assistant general manager.

Sales picked up on Saturday, though the dealership had only 20 new cars eligible for sale under the program. Sales employees sometimes jogged paperwork into the manager’s office to keep up with the pace.

The dealership won’t take any new sales on Monday so it can be assured of reimbursements, Collins said.

“We have quite a bit of paperwork, but is it worth the selling of a car right now? Absolutely,” he said. “We like to sell cars. That’s what we’re in business to do.”

Martin Main Line Honda in the Philadelphia suburb of Ardmore stopped its Cash for Clunkers sales at noon on Saturday. But by late afternoon there were still groups of people wandering the lot.

General sales manager Michael Freeman said the program had been “overwhelming,” with 115 clunker sales and big surges in customer traffic at the start and now at the end. He’s aiming to get the final stack of paperwork filed before Monday’s deadline.

“I have people upstairs, that’s all they’re doing — paperwork,” he said. “The backlog is a nightmare, and it’s starting to be a nightmare at the end.”

Customers were feeling the urgency, too.

In Appleton, Wis., April DeKeyser looked at her new Mazda 3 2010 and still had trouble accepting that it was hers.

The 22-year-old nurse from Brussels, Wis., had wanted to trade in her Chevy S10 truck as soon as the clunkers program began. But she had a hard time finding the car she wanted and had to run to numerous dealers.

DeKeyser said she knew she had to get the rebate this weekend. Without it, she wouldn’t have bought her new car.

“I would have waited,” she said. “Basically, I would have driven the other vehicle until it died.”

——

Associated Press writers Alex Veiga in Los Angeles, Andrew Welsh-Huggins in Columbus, Ohio, Ron Todt in Philadelphia and David Gram in Berlin, Vt., contributed to this report.

Find this article at:

http://www.detnews.com/article/20090824/AUTO01/908240319/Final-weekend-of-clunkers-program-draws-big-crowds

On the slow train to financial reality

For years, Massachusetts has been blessed with leaders who understand the vital importance of public transportation, so planners are in the habit of thinking big, rather than saying no. But the need for restraint is apparent. Federal transportation officials rejected a long list of proposed transit and highway projects in 2007 in part because it lacked any fiscal modesty. While the state slashes health programs amid plunging revenues, it expects to spend $29 million to design a connection downtown between the Red Line and the Blue Line – never mind that the money to build the $300 million project won’t come through anytime soon.

A Privileged World Begins to Give Up Its Secrets

About 10 years ago, when I was working in Frankfurt, Germany’s banking capital, I was invited to the top floor of the glittering skyscraper headquarters of one of the country’s most venerable banks. There, I was treated to something that, it was made clear to me, few eyes usually had the privilege of seeing — a tour of its private art collection, an impressive spattering of modern and ancient European and American masters.

The point was, those pictures reflected the bank’s wealth. And the fact the secretive treasures were kept forever behind closed doors for the enjoyment of the privileged few reflected its power.

If that seems like a different era, it is. Banks around the world are reeling, as we know; the European banks’ losses are among the most ruinous. And their prestige and putative secrecy and independence received a further blow last week, when the government of Switzerland agreed to release to the United States the names of 4,450 American citizens suspected of using secret Swiss accounts at UBS, the country’s biggest bank, for tax evasion.

The victory for the United States was made possible by evidence from an American-born whistleblower — code name Tarantula — a disgruntled former UBS employee from the Boston area who was working in Switzerland. Until he left the bank, he was part of a UBS team that made frequent trips across the Atlantic to aggressively market investment strategies to rich Americans to elude the scrutiny of the Internal Revenue Service.

But it would be wrong to see the settlement as a one-off strike against just one bank by a single government. It is in fact the result of a broader political moment created in the wake of the global financial crisis when disenchantment with financial globalization is causing governments to repatriate wealth back to within national borders, especially at a time when countries badly need to balance their books.

Just a few years ago, in the pre-crisis era, the shadowy workings of cross-border banking — and what may or may not have been happening there — were generally overlooked.

And, while some of the alleged tax evaders may be the war criminals, gunrunners or despots usually linked with secret foreign bank accounts, the target of the latest efforts are much more likely to include rich businessmen and high-net-worth individuals. “There is a political movement because of the financial debacle,” said one veteran European banker who insisted on speaking anonymously because he has retired. “They are turning toward the so-called rich and want to hurt them.”

Of course, the United States looks at it a bit differently. Prosecutors have contended that in the UBS case alone, wealthy Americans hid billions of dollars, thereby evading taxes of hundreds of millions of dollars a year.

While Switzerland is arguably the largest off-shore center, it is not the only one. Supporters of its banking secrecy code point out that the code is wrapped up in the country’s claims to neutrality and being above the global political fray. But secrecy has also turned out to be immensely lucrative; according to some estimates one-quarter of the world’s offshore money now resides in Switzerland.

Other countries or territories have copied the model — Liechtenstein, Bermuda, the Cayman Islands, Macao and Hong Kong among them. And while Switzerland is probably seen as the most conservative, blue chip, upstanding offshore haven, the others are measured by a sliding scale of probity and association with dubious business practices, if not crime. The European banker said that in the early 1990s, following the fall of the Soviet Union, he worked in Switzerland where he said agents of Russian expats would show up with “boxes of cash” from Cyprus, a popular haven for capital fleeing the Russian authorities and the country’s post-collapse chaos.

The backlash against this illicit world has not been confined to the United States; it is apparent across Europe, too.

France will become of one of the first European countries to put in place a new tax treaty with Switzerland to improve transparency and access to banking information. Germany is in discussions with Liechtenstein over issues related to tax evasion by German companies and individuals. Liechtenstein has also struck a disclosure agreement with Britain, encouraging British clients of Liechtenstein banks to volunteer information to British tax authorities in return for reduced penalties. In Italy, tax officials have started an investigation into whether the estate of the late Gianni Agnelli, the former chairman of Fiat, has money hidden away in Switzerland. In Britain, the government has become particularly exercised by tax competition — the offering of low tax rates and other advantages like tax secrecy to lure capital away.

In the Swiss settlement last week, the American authorities got the information they needed after they saw an opportunity in the weakness of UBS, a bank that once enjoyed a sterling global reputation but has suffered billions of dollars in losses linked to United States subprime securities and had to be saved by a big government bailout last October. For the Swiss government, the deal lifts the immediate threat of heftier legal action and frees the bank — one of the mainstays of the Swiss economy — to concentrate on recovery.

But will anything really change? Although the United States is supposed to learn the identities of a few thousand tax evaders, those names will go first to an intermediate tax administration in Switzerland for review. The actual process of recovering the names may become lost in bureaucracy and foot-dragging.

Moreover, as The Times reported last week, smaller Swiss banks say they are confident that they can continue to profit by finding new, more elaborate ways to protect the privacy of their clients. Those banks continue to help clients hide billions of dollars through complex structures in offshore havens.

But the I.R.S. commissioner, Doug Schulman, said the agreement with UBS was a “major step forward” in the government’s efforts to pierce bank secrecy, and he warned that “wealthy Americans who have hidden their money offshore will find themselves in a jam.”

In the new political climate, expect to see a few rich Americans shifting uncomfortably.

The 12 most annoying types of Facebookers

(CNN) — Facebook, for better or worse, is like being at a big party with all your friends, family, acquaintances and co-workers.

There are lots of fun, interesting people you’re happy to talk to when they stroll up. Then there are the other people, the ones who make you cringe when you see them coming. This article is about those people.

Sure, Facebook can be a great tool for keeping up with folks who are important to you. Take the status update, the 160-character message that users post in response to the question, “What’s on your mind?” An artful, witty or newsy status update is a pleasure — a real-time, tiny window into a friend’s life.

But far more posts read like navel-gazing diary entries, or worse, spam. A recent study categorized 40 percent of Twitter tweets as “pointless babble,” and it wouldn’t be surprising if updates on Facebook, still a fast-growing social network, break down in a similar way. Take a CNN quiz: What kind of Facebooker are you? »

Combine dull status updates with shameless self-promoters, “friend-padders” and that friend of a friend who sends you quizzes every day, and Facebook becomes a daily reminder of why some people can get on your nerves. Watch as Facebookers reveal bugbears »

Here are 12 of the most annoying types of Facebook users:

The Let-Me-Tell-You-Every-Detail-of-My-Day Bore. “I’m waking up.” “I had Wheaties for breakfast.” “I’m bored at work.” “I’m stuck in traffic.” You’re kidding! How fascinating! No moment is too mundane for some people to broadcast unsolicited to the world. Just because you have 432 Facebook friends doesn’t mean we all want to know when you’re waiting for the bus.

The Self-Promoter. OK, so we’ve probably all posted at least once about some achievement. And sure, maybe your friends really do want to read the fascinating article you wrote about beet farming. But when almost EVERY update is a link to your blog, your poetry reading, your 10k results or your art show, you sound like a bragger or a self-centered careerist.

The Friend-Padder. The average Facebook user has 120 friends on the site. Schmoozers and social butterflies — you know, the ones who make lifelong pals on the subway — might reasonably have 300 or 400. But 1,000 “friends?” Unless you’re George Clooney or just won the lottery, no one has that many. That’s just showing off.

The Town Crier. “Michael Jackson is dead!!!” You heard it from me first! Me, and the 213,000 other people who all saw it on TMZ. These Matt Drudge wannabes are the reason many of us learn of breaking news not from TV or news sites but from online social networks. In their rush to trumpet the news, these people also spread rumors, half-truths and innuendo. No, Jeff Goldblum did not plunge to his death from a New Zealand cliff.

The TMIer. “Brad is heading to Walgreens to buy something for these pesky hemorrhoids.” Boundaries of privacy and decorum don’t seem to exist for these too-much-information updaters, who unabashedly offer up details about their sex lives, marital troubles and bodily functions. Thanks for sharing.

The Bad Grammarian. “So sad about Fara Fauset but Im so gladd its friday yippe”. Yes, I know the punctuation rules are different in the digital world. And, no, no one likes a spelling-Nazi schoolmarm. But you sound like a moron.

The Sympathy-Baiter. “Barbara is feeling sad today.” “Man, am I glad that’s over.” “Jim could really use some good news about now.” Like anglers hunting for fish, these sad sacks cast out their hooks — baited with vague tales of woe — in the hopes of landing concerned responses. Genuine bad news is one thing, but these manipulative posts are just pleas for attention.

The Lurker. The Peeping Toms of Facebook, these voyeurs are too cautious, or maybe too lazy, to update their status or write on your wall. But once in a while, you’ll be talking to them and they’ll mention something you posted, so you know they’re on your page, hiding in the shadows. It’s just a little creepy.

The Crank. These curmudgeons, like the trolls who spew hate in blog comments, never met something they couldn’t complain about. “Carl isn’t really that impressed with idiots who don’t realize how idiotic they are.” [Actual status update.] Keep spreading the love.

The Paparazzo. Ever visit your Facebook page and discover that someone’s posted a photo of you from last weekend’s party — a photo you didn’t authorize and haven’t even seen? You’d really rather not have to explain to your mom why you were leering like a drunken hyena and French-kissing a bottle of Jagermeister.

The Maddening Obscurist. “If not now then when?” “You’ll see…” “Grist for the mill.” “John is, small world.” “Dave thought he was immune, but no. No, he is not.” [Actual status updates, all.] Sorry, but you’re not being mysterious — just nonsensical.

The Chronic Inviter. “Support my cause. Sign my petition. Play Mafia Wars with me. Which ‘Star Trek’ character are you? Here are the ‘Top 5 cars I have personally owned.’ Here are ‘25 Things About Me.’ Here’s a drink. What drink are you? We’re related! I took the ‘What President Are You?’ quiz and found out I’m Millard Fillmore! What president are you?”

You probably mean well, but stop. Just stop. I don’t care what president I am — can’t we simply be friends? Now excuse me while I go post the link to this story on my Facebook page.

All AboutFacebook Inc.

Find this article at:

http://www.cnn.com/2009/TECH/08/20/annoying.facebook.updaters/index.html?iref=newssearch

Lisa van der Pool – Article Courtesy of the BOSTON BUSINESS JOURNAL

Retirees Ignore Bonds At Their Own Risk

BOSTON — When it comes to investing, most retired Americans have it backwards. Instead of investing in bonds — things that provide a return on capital, those seeking retirement-income security tend to invest in things that provide a guaranteed return of capital. Doing so could lower one’s standard of living, especially when short-term interest rates fall.

“Retired households seeking a secure and dependable income should prioritize return on capital over return of capital,” wrote Anthony Webb, author of a report released this week by the Center for Retirement Research at Boston College.

“Households need to make a conscious effort to learn to focus less on the market value of their investments and more on the consumption they can support,” he said.

To Webb’s way of thinking, “the true risk-free asset is a portfolio of bonds and, in particular, inflation-protected bonds of appropriate maturities.” In other words, Treasury Inflation Protected Securities or TIPS. Read his report.

That’s not what most investors are doing now. Most retired Americans prefer investments such as Certificates of Deposit and T-bills — investments that provide safety and liquidity. For instance, 86% of households nearing retirement have bank accounts, while just 33% own stocks directly and just 7% own bonds directly, according to another CRR study. Read that study (PDF).

Yes, short-term deposits do provide a guaranteed return of capital, but they don’t offer guaranteed returns, Webb said. And that’s what most retired households need.

“The ultimate objective of retirement saving is to finance consumption,” Webb wrote. “The standard of living of a household that invests in short-term deposits is at risk if short-term interest rates fall. In contrast, changes in interest rates and bond prices may have no effect on the standard of living of a household investing in bonds.”

Given that, how might you re-jigger your portfolio?

Ladder your bonds

In a perfect world, if you knew in advance how much of your capital you planned to consume or spend in the future, you would put together a bond portfolio with income payments that matched your consumption needs. In other words, you would ladder your portfolio. And you would match your asset (the bond) with your liability (your expenses.)

For his part, Michael Zwecher, author of a forthcoming book on retirement, said another way to achieve the nearly same result is to ladder Treasury STRIPS or what are sometimes called zero-coupon securities. These are securities that pay a fixed rate of return and are stripped down to single payment components, he said. As single payments, they sell at a discount and rise over their life to pay par on maturity.

“They can be set up in a ladder to provide steady or customized income streams,” he said. Plus, STRIPS are highly safe and liquid. What’s more, STRIPS are standardized and mature on either Feb. 15 or Aug. 15 each year. Currently they can be bought to cover maturities ranging from 2010 to 2039, he said. Learn more about Treasury STRIPS at this site.

Meanwhile, Aaron Skloff, chief executive officer of Skloff Financial Group said that corporate bonds currently provide “excellent risk/reward” for retirees. “Fears of mass defaults have waned, as the ‘definite’ collapse of the global financial system has once again become a remote probability.” He said investors concerned about buying a “bad” bond should consider a basket through an ETF or bond fund.

Duration matching

Unfortunately, laddering a bond portfolio “probably requires more knowledge and patience than most households possess,” Webb said. Instead, you might try what he calls the simple version of this strategy. “Invest in a mutual fund or exchange-traded fund investing in bonds with an average duration that equals the household’s life expectancy,” he said.

“Early in retirement, the household would invest mostly in long-dated bonds. Later in retirement, it would gradually rebalance its remaining assets in favor of shorter maturity bonds, matching the reduction in its remaining life expectancy,” Webb said.

Optimize your asset allocation

To be sure, you wouldn’t invest 100% of your retirement nest egg in bonds. Instead, Webb suggests that to optimize the amount you invest between stocks and bonds. And to do that you need to consider your entire retirement-income portfolio. For instance, he said Social Security is similar to owning TIPS. And having a defined-benefit pension plan is similar to owning regular or what he calls nominal bonds.

“Those sources of income are good substitutes for inflation-protected and nominal bonds in household portfolios, and households with large amounts of these sources of income should invest larger proportions of their financial assets in equities than otherwise similar households,” he said.

Others also urged investors not to over-invest in bonds just because they provide a guaranteed rate of return. Don’t confuse certainty with safety, said Harold Evensky, the president of Evensky & Katz. “The payment on bonds, assuming no default, may be certain but for most investors a total allocation to bonds is certainly not safe,” he said.

“The problem is that most investors require a real after-tax return that significantly exceeds the return provided by fixed-income investments. As a result, an over-concentration in bonds will result in a gradually decreasing living standard.”

What’s more, Evensky said it’s important to consider all the risks that come with investing in bonds, including interest-rate risk, credit risk, and inflation risk, before you start moving money out of CDs and T-bills.

“Unless the [Center for Retirement Research] is in the business of pumping bond sales, I think that it would do well to frame the results of its study with the reality of risks other than market volatility.” he said.

Robert Powell is the editor of Retirement Weekly. Learn more about Retirement Weekly here .

Copyright © 2009 MarketWatch, Inc.

Beantown showdown: JetBlue and Southwest face off

By SAMANTHA BOMKAMP (AP)

Article Courtesy of:  Associated Press

NEW YORK — The cool kids of the airline industry are giving big-city travelers more opportunities to show who they like more.

For years, JetBlue and Southwest catered to customers in the same way — with cheap fares and good customer service — but avoided much head-to-head competition in major markets. These days, they are trying to distinguish themselves as they ramp-up competition in places like New York, Washington, Baltimore — and starting this weekend, Boston.

Fliers stand to benefit as these airlines expand in the Northeast. This rivalry not only pits one popular low-cost carrier against another; it puts further pressure on other airlines to stay competitive with them.

It also means JetBlue and Southwest must find ways to differentiate themselves. Southwest is touting its fewer baggage fees and more extensive nationwide presence, while JetBlue is highlighting its live TV service and its own comprehensive route system.

Just over a month after Southwest began flying out of New York’s LaGuardia — eight miles from JetBlue’s base at John F. Kennedy International — Southwest begins service on Sunday from Boston’s Logan International Airport. In September, Southwest starts service between Boston and Baltimore.

A few years back, their flights mostly crossed paths in places like Burbank, Calif., and Orlando, Fla.

The move to New York was a game-changer for Southwest. Formerly it concentrated on smaller, less-congested airports, where it could count on quick turnarounds, a key to its low-cost model.

And with Southwest breathing down its neck, JetBlue has had to make a more aggressive defense of its traditional turf, cutting fares and mulling new routes.

Expect to see low fares discounted further on routes where Southwest and JetBlue will compete out of Boston — especially to Northeastern markets, Chicago and Los Angeles.

When Southwest announced it would fly from Boston to Baltimore for as low as $49, JetBlue said a week later it would launch the same route — offering tickets for $10 less.

“It makes me think of gunfighters in the Old West — who is going to be the last man standing?” said Harlan Platt, a finance professor at Northeastern University who follows the airline industry.

Dallas-based Southwest is the biggest U.S. airline by the number passengers flown. JetBlue is tenth, but it’s No. 2 at Logan.

Much of JetBlue’s model of low fares and quick turnarounds came right out of Southwest’s playbook. It’s no wonder. JetBlue founder David Neeleman started JetBlue in 1999 after he was fired from Southwest.

In 1993, Southwest bought a little-known discount charter airline called Morris Air, based in Salt Lake City. Its co-founder — Neeleman — came to Southwest.

But that didn’t last long. Southwest founder Herb Kelleher — a cigarette-smoking, Wild Turkey-drinking Texas lawyer that revolutionized the airline industry in the 1970’s — fired Neeleman after just five months. Neeleman, a Brazilian-born Mormon father of nine who’s never touched booze, had new ideas for expanding Southwest that were scoffed at by long-time executives there.

JetBlue (originally NewAir) was started with $130 million from investors — the most ever for a startup carrier. Neeleman attracted several Southwest executives to the new airline as well. Three Southwest veterans are with JetBlue today. One worked with Neeleman since his days at Morris Air.

JetBlue started with a single flight to Fort Lauderdale, Fla. It now has 650 daily flights to 56 cities. Its rapid growth has now started to plateau, but JetBlue is still steadily adding new service in markets larger carriers have turned away from — like the Caribbean.

JetBlue has been in Boston for five years, although it’s only recently targeted the city as a focus of its expanding operations.

Southwest will start Boston service with five weekday nonstops to Chicago-Midway and Baltimore-Washington International, with connecting and direct service to 48 other spots including Houston, San Francisco, Las Vegas and Los Angeles.

Boston is familiar with Southwest because of its service in nearby Manchester, N.H., Providence, R.I., and Hartford, Conn. — three markets it has been serving for about a decade.

Both carriers’ low fares and brand loyalty should give them a leg up against major carriers in Boston. It’s already worked for JetBlue. The airline has worked its way up to second place at Logan in passenger traffic, behind American and ahead of US Airways, which operates a Boston-New York and Boston-Washington shuttle service.

“When you enter a town the size of Boston as really the sole low-cost carrier (like JetBlue did), you really can pick off a lot of the legacy carriers,” finance professor Platt said. “But when the last two gunfighters are JetBlue and Southwest, you’ve got another game.”

Platt thinks Southwest eventually will win the discount competition with JetBlue in Boston because of its large network and image as an anti-fee airline with ads that say “Your Bags Fly Free.” Southwest lets two bags fly free, but charges for a third checked bag. JetBlue charges for the second checked bag.

JetBlue wants more business travelers, as does Southwest, which has tried to lure them with its “Business Select” option launched two years ago. Passengers that pay a premium can go to the front of the boarding line. Neither airline offers business or first class seats.

JetBlue said in July that although it has not focused on courting business travelers in the past, it’s landing more of them in New York and Boston as companies cut travel budgets.

Because of their cheap fares and high customer service rankings, both airlines have legions of loyal travelers. Part of that loyalty can also be traced to fresh marketing that tries to put some fun in flying. JetBlue’s tongue-in-cheek ads have urged executives to get off their private jets and fly JetBlue. In Southwest TV ads, CEO Gary Kelly told customers “It’s On” in New York.

Both airlines are on YouTube. Blogs and Twitter are also important parts of their brands.

Kelleher and Neeleman no longer run the airlines they started. Kelleher, 78, stepped down as chairman last year, but he is still under contract until 2013. Neeleman, 49, runs Azul Airlines in Brazil — a venture he started after he was pushed out of JetBlue in 2007 following the company’s bungled response to a Northeast snowstorm, leaving 130,000 passengers stranded or delayed.

But the airlines they started still have the low-cost, passenger-savvy traits of their founders. Both have flown farther and lasted longer than some of their larger competitors. Platt thinks the big airlines may have something to worry about now in Boston — and JetBlue will have to ramp up its game, too.

“Boston has really been a two-horse town with (two major carriers dominating service there),” he said. “Just the mere presence (of another low-cost carrier) is going to change the landscape.”

Copyright © 2009 The Associated Press. All rights reserved.

The Martha’s Vineyard Times

Mass in top 10 for stimulus spending

STATE HOUSE, BOSTON, AUG. 13, 2009…..The state, local governments and private entities in Massachusetts have received $4.44 billion and spent more than $2.02 billion, 45 percent, through the federal stimulus law, known as the American Recovery and Reinvestment Act.

That percentage of spending puts Massachusetts seventh among states in the rate of putting stimulus funds into the economy, Executive Office of Administration and Finance officials said Thursday. By the end of the life of the stimulus in fiscal 2011, the state expects to receive $9.22 billion for spending out of $514 billion doled out nationally, as well as $4.28 billion in tax benefits, compared to $272.52 billion nationally.

Testifying Thursday before the Legislature’s Committee on Federal Stimulus Oversight, budget officials said the federal funds had helped save budgets for important social welfare programs, spark infrastructure development and retain jobs. But “evolving” federal guidance has made it difficult to track the number of jobs created, they said.

Much of the funding has been used in the state budget, effectively preserving jobs that may have been cut.

Secretary of Administration and Finance Leslie Kirwan said stimulus spending was one facet of the Patrick administration’s effort to turn around the Massachusetts economy, which has seen tens of thousands of job losses and deteriorating tax collections in recent months. Other aspects include the state’s borrowing program, an accelerated bridge repair program, as well as investments in broadband, clean energy and life sciences.

Of the $2.02 billion in stimulus funds spent, state agencies are responsible for $1.47 billion, including $419 million for education, $1.02 billion for safety net programs, $12.4 million for public safety efforts, $8.1 million for labor and workforce development programs and $4.5 million for transportation programs. The rest flows directly into cities and towns, school districts and non-governmental entities.

Spending deadlines for hundreds of millions of dollars of transportation infrastructure funds have been met and exceeded, said Jeffrey Simon, director of the Patrick administration’s Office of Infrastructure Investment, which oversees much of the stimulus spending. Those deadlines included a 120-day window to spend $153 million on highway repairs – Massachusetts spent $191 million – and a 180-day timeframe to spend $159 million on transit – the state has spent $164 million as of two weeks ago – Simon said. If those deadlines had not been met, the state would have had to return the money to the federal government.

Administration officials said they were struggling to quantify the number of jobs created by ARRA funds because of “evolving” guidance for how to calculate job gains and job retention.

“We’re on version three now of directives from [the federal Office of Management and Budget],” Simon said. Simon pointed to an October 10 deadline for reporting such numbers, when the state hopes to have clearer guidance.

Sen. Marc Pacheco, who co-chairs the stimulus oversight committee, said he expected “a good news story” when those job numbers were available.

Kirwan later said she expected the numbers to show that “most likely thousands of local jobs” had been created or retained. She, as well as committee co-chair Rep. David Linsky, said the federal funds for safety net programs – food stamps, mental health services and others – had saved lives.

Since March 19, the last time Administration and Finance officials came before the committee to discuss stimulus funding, Simon’s office has hired two veterans of Attorney General Martha Coakley’s office to help oversee infrastructure spending. The two, Stephanie LeBlanc and Douglas Rice, who respectively serve as infrastructure assessment manager and compliance and reporting manager, worked on Big Dig cost recovery efforts for Coakley. Simon said hiring officials with that experience made “a statement” about the administration’s seriousness about ensuring that public dollars are spent wisely.

Kirwan told committee members the administration had hoped to evenly spread its stimulus funds through fiscal years 2009, 2010 and 2011, but steep deterioration in revenue collections moved state policymakers to frontload much of the stimulus spending to help balance the fiscal 2009 budget.

“When the governor first put this budget together for fiscal ’10, we had not yet experienced the revenue losses for April and June,” she said, noting that those two months saw revenues miss benchmarks by $500 million and $180 million, respectively. “At this time last year, we still had not lost a dollar of revenue. We did not until the middle of September last year have any loss of revenue.”

Comptroller Martin Benison also testified at the hearing, describing his office’s efforts to track and report on 34 separate grant awards overseen by OMB. Twenty departments – 16 executive agencies, two non-executive departments and two colleges – are responsible for administering those grants, which have totaled more than $500 million to date. Much of that includes a $412 million use of education funds to offset a fiscal 2009 local aid reduction.

Benison said his office holds weekly conference calls with stimulus stakeholders to coordinate reporting efforts.

AutoTrader.com sees big jump from ‘clunkers’

The Chevrolet Camaro claimed the No. 1 spot on AutoTrader.com’s most viewed new vehicles list for the third month in a row, topping off what has become one of the first positive months for new car sales in over a year.

Cash-for-Clunkers brought consumers on-line and into showrooms in July to look for cars, reflected in AutoTrader.com site traffic of 15.3 million unique visitors to the site during the month of July. July marked the seventh month in a row that AutoTrader.com has seen its unique monthly visitor count top 15 million, the company said.”We have been waiting for the pent-up demand for new vehicles to uncork all year, and Cash-for-Clunkers has provided the jolt the industry needed,” said AutoTrader.com President and CEO Chip Perry. “Consumers have been turning primarily to the Internet to research information about cars and prices, and that research is finally being put into action as these shoppers turn into buyers at dealerships across the country.”

Among new vehicles, the all-new Chevrolet Equinox saw an impressive 197% increase in views, moving it from 99th to 18th year-over-year. Similarly, the recently redesigned Ford Fusion saw an increase in views of 28%, enough to move the midsize sedan from 35th to 16th overall. Ford also saw an increase in asking prices for the new Fusion of 12%, with the average price of vehicles listed on AutoTrader.com being $24,798. This compares well the Fusion’s chief competitors, the Honda Accord and Toyota Camry, which had average listing prices of $25,217 and $24,487, respectively.

Continuing to look at Ford vehicles, the new F-250 full-size pick-up, which saw a severe drop in sales last July due to record-high $4 per gallon gas, also saw a significant year-over-year increase in consumer activity, with views increasing 87%. Finally, Kia saw one of the largest increases in views among brands as a whole, as consumer activity around vehicles such as the newly-introduced Soul crossover and the new Forte compact sedan helped move the brand to its first-ever appearance on the top 10 Most Viewed Manufacturers list.

“With demand for many cars high now, supplies of vehicles at many dealerships have run short,” said Perry. “For consumers looking to now take advantage of the CARS legislation by purchasing a popular model such as one of these, turning to AutoTrader.com to locate a dealer with the exact new vehicle of their choice is certainly the smart way to go.”

Used & CPO Car Activity

Among used and CPO vehicles, the Ford F-150 saw a 31% gain to become the most viewed used vehicle, while the BMW 3-series once again topped the list of most viewed among CPO vehicles. More notably, prices for used vehicles across a variety of segments rose, with trucks seeing the largest jumps from last year’s lows. The biggest gainer was the Chevrolet Tahoe, which saw an increase in average asking price of 20% compared to July of 2008.

“Excepting last summer’s unusual selling situation brought about by record high gas prices, the consumer demand for larger vehicles such as SUVs has generally continued unabated,” said Perry. “Though we are beginning to see a gradual shift in consumer tastes to smaller vehicles, it will be a while before we see many Americans ready to abandon their bigger vehicles entirely.”

For more information visit: www.Autotrader.com

We agree with much of Attorney Gennari’s advice on how to prepare for your pitch to a venture capitalist or other private investors. For bandwidth-constrained founders, they are most concerned with the efficacy of finding and attracting the attention of appropriate investors. From this perspective, entrepreneurs and business execs should consider a forum specifically designed with input from the region’s leading private capital investors to offer an effective and efficient venue for identifying, screening, matching and assessing investment suitability of rapidly growing companies. Speed Venture Summit is New England’s premier event for business executives to speed pitch their growth story to private capital investors: in the course of a single day, they meet face-to-face with six different groups of the region’s leading private capital investors. For more information, please visit www.speedventuresummit.org

Downsizing the big banks: A long-term solution

The hundreds of billions in rescue funds needed to support banks — and the trillions in implicit subsidies — has brought the question of appropriate institutional size to the forefront of regulatory reform. Not surprisingly, FDIC Chairwoman Sheila Bair and Federal Reserve Chairman Ben Bernanke favor measures collectively intended to limit the size of banks in the future, Bloomberg News reports.

Options include raising capital ratios as a bank increases in size, accelerating the increases in fees paid to the FDIC, and lowering the cap on the percentage of nationwide deposits any one bank can take. Overall, the goal is to have “financial disincentives for size and complexity,” according to Bair. Complexity encompasses untraditional banking activities, such as the proprietary trading that drove Goldman Sachs’ (GS) hugely profitable quarter, as well as investing in structured financial products.

There’s no doubt that the majority of large banks took on more risk than they could handle during the last few years. Scale can be helpful in banking, but it can also mean that improper activities are occurring because management’s oversight is less effective. A trillion dollar-plus balance sheet can hide a lot of bad assets and hidden risks. As the too-big-to-fail debate rages on, the real goal is how to avoid a bank that is too-big-to-rescue.

If it seems absurd that the current raft of bailout programs could need to be repeated one day in such a larger size as to be impossible for the U.S. government to finance, consider what’s happening in the financial system now. As certain banks go under (like Washington Mutual) and others are absorbed (like Wachovia) — the result is greater concentration of banking assets under the survivors. I’ve argued elsewhere that this is both a natural and healthy part of market cycles. However, if the government is implicitly supporting existing large banks — keeping them around in the hopes that they can help clean up the mess by taking over other failed institutions — then all bets are off.

The current working plan of regulators and the Treasury Department is to increase concentration in the banking system, but it’s a near-term patch job and the exact opposite of what’s necessary long-term. Promoting stability means promoting an environment where the failure of one does not lead to a potential failure of all, and that’s tough to do when the top handful of financial institutions have huge balance sheets and extensive counterparty entanglements with each other. If that means creating a well-defined line between the dealings of regulated banks and unregulated investment banks or hedge funds, then that discussion should be on the table.

Luckily, America hasn’t yet been confronted with a financial crisis “fix” that exceeds its capacity to borrow. But to ensure that doesn’t happen in the future, institutions need to be appropriately sized so that they aren’t crucial enough to create the hope for financial help when times get tough.

James Cullen edits and writes at CollegeAnalysts.com. He is the vice president of the Boston College Investment Club, which owns shares of GS, but he has no personal position in the stocks mentioned above.

Financial News – Can IMF be global banker?

THINK AGAIN BY ANDREW SHENG

FLYING to Boston for a conference on the global crisis, I went into the famous Harvard Coop bookstore in Cambridge. It was like my favourite candy store, I dashed here and there, picking up books I could not get in Asia and browsed new books that I could not see from Amazon.

Boston hosting 1st Latino professional convention

As the nation’s first Latino Supreme Court justice is set to be sworn in today, Boston will welcome its first-ever convention of Latino professionals.

Some 2,000 members of the Association of Latino Professionals in Finance and Accounting are expected to gather here starting today for their national convention.

A Greater Boston Convention & Visitors Bureau official said this will be the biggest gathering of Latino professionals ever in the Hub.

The association’s Boston chapter – which has more than 1,500 members – is the nation’s largest, said Romina Wilmot, vice president of marketing and public relations for the Hub chapter.

She attributed the Boston chapter’s success to its leadership and the region’s growing number of Latino professionals. In the past decade, Boston’s Latino population has grown 21 percent, to 103,000, according to city data.

“We have had very strong and active leaders, who are very passionate about this group,” said Wilmot, a former advertising specialist for Marshall’s who relocated from Honduras to Boston as a young girl.

The conference runs through Wednesday and association members will be gathering in three different hotels in the Copley Square area.

As attendees gather for their first day of meetings, many will be celebrating Sonia Sotomayor’s swearing in as Supreme Court associate justice.

“I’m sure everyone will be discussing that,” Wilmot said.

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1189894

Apartments, museum lead race for Greenway site

BRA says proposals most consistent with its plans for parcel

Boston chefs scalded in ‘Hell’s Kitchen’

It was a rough night for the two Massachusetts chefs competing in “Hell’s Kitchen,” which premiered Tuesday on Fox TV.

Fitchburg diner owner David “Louie” Cordio was booted in the middle of dinner service by chef Gordon Ramsay – the only contestant in six seasons to be kicked off the reality TV show even before the first elimination ceremony.

The two-hour show ended with a cliffhanger. Fans of Boston chef Andy Husbands, nominated by his team for elimination in the second round, will have to tune in next Tuesday to see if he’s dispatched.

It was a memorable, if short, run for Cordio, who in one scene doffed his shirt to do a champagne-fueled cannonball into a hot tub.

Now he wants to go mano-a-mano with Ramsay outside the kitchen. “Put all the spatulas and spoons aside,” Cordio, 45, said. “I just want a cage match.”

So is Cordio bitter about his early exit and Ramsay’s criticism of his signature dish? “It’s TV, what can you do?” he said. “Somebody has to go out first. I just think chef Ramsay is a clown, if you ask me.”

The 16 “Hell’s Kitchen” contestants had 45 minutes to prepare their signature dishes for the series’ first challenge, and Cordio made sausage gravy over biscuits.

“Ah, (expletive) me, what is it?” was Ramsay’s first reaction.

Cordio asked Ramsay what was wrong with the dish, noting he sells “5 gallons” of it a week at his 50/50 Diner in Fitchburg. “It tastes like gunk!” Ramsay replied after spitting out a mouthful.

The final straw for Ramsay was Cordio’s performance on the meat station on opening night of the Hell’s Kitchen restaurant. After reaming Cordio for putting the rack of lamb in the oven without searing and seasoning it – and wasting a heaping plate of it – Ramsay ordered him to get out of the kitchen and pack his bags.

But Cordio had a parting shot for Ramsay in his final closeup: “He can kiss my (expletive) ass!”

Tremont 647 chef Husbands, who also failed to win a point for his signature dish, had problems with allegedly undercooked chicken during the second night of dinner. “It was tough, and I definitely goofed some stuff up,” said Husbands, who was hit with one of Ramsay’s “you (expletive) donkey” insults.

Husbands was sweating it in the hours prior to the show’s airing, as evidenced by his Twitter tweets. He went from a “little” nervous to “losing my mind” and “head about to explode” a few hours before.

***

More Boston Restaurant News

A new jazz lounge and eatery is headed to Columbus Avenue in Boston’s South End.

The Stork Club Boston is drawing its inspiration from speakeasies and its name from the former Stork Club that operated in New York City from 1929 to 1965 and drew the likes of Charlie Chaplin, Ernest Hemingway, J. Edgar Hoover and the Kennedys.

It’s taking the place of Circle Plates and Lounge, an upscale French restaurant that opened last October in the former Bob’s Southern Bistro space and closed six weeks later.

Managing partner Ziad Chamoun, previously director of operations for the Barking Crab restaurants in Boston and Newport, is buying out the current owner.

“The goal is to bring back a place where there’s conversation and music, and artists and people from different groups within Boston can come in and enjoy,” spokesman Marc Deley said. “There will be weekly live jazz music, but it will be more atmospheric jazz.”

The 88-seat Stork Club Boston is slated to open Aug. 11.

***

Executive chef Jeff Poliseno’s menu of comfort food “with a twist” that’s meant to be shared will be served until 1 a.m., an hour before closing, with prices of $7 to $17. Poliseno formerly worked at American Seasons on Nantucket and as executive chef at Boston’s Vox Populi.

***

A little bit of news on the restaurant replacing Excelsior at Boston’s Heritage on the Garden.

London’s Marlon Abela Restaurant Corp., which Himmel Hospitality is partnering with to run the restaurant, has posted a help-wanted ad for a “Provencal-style bistro.”

The Turning the Tables column runs every other Friday. Send restaurant tips to

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1186780

Globe says readers to pay for Web site

Photo by boston.com

The Boston Globe will soon begin charging for its Web site, publisher P. Steven Ainsley told the paper’s union bosses yesterday as the Globe’s parent New York Times [NYT] Co. confirmed in a regulatory filing that the money-losing Hub broadsheet is for sale.

News of the Globe’s intention to charge for Boston.com came a day after News Corp. [NWS] Chairman Rupert Murdoch announced his company would start charging for content at all of its news Web sites, including the New York Post, The Times of London and The Sun, a popular British tabloid. News Corp. already charges for some access to The Wall Street Journal’s Web site.

Globe spokesman Bob Powers said charging for Boston.com appears inevitable.

“It’s going to happen one way or another,” Powers said. “We are looking at several different options, and the goal would be to generate revenue.”

Ainsley also told Globe union bosses the combination of price increases and labor cost reductions, including $20 million in union concessions, have put the paper on better financial footing.

He said union concessions, plus $8 million in Globe management givebacks and the $18 million the company expects to save by closing its Billerica printing plant, have all helped, sources said.

The Times’ quarterly report filed yesterday shows the company spent $30 million to close its Billerica printing plant. Sources have told the Herald that at least one outside party was interested in the plant, but was rebuffed.

Ainsley refused to answer questions about the potential sale of the Globe at yesterday’s meeting, saying his Times Co. overlords had ordered him to keep mum.

Article URL: http://www.bostonherald.com/business/media/view.bg?articleid=1189673

News Corp. plans fees for newspaper Web sites
/business/media/view.bg?articleid=1189759

Nonprofit Globe no easy fix
/business/media/view.bg?articleid=1188720

Young investors wary of jumping into market lows

By Erin Kutz

BOSTON (Reuters) – Young investors may accept the argument that those who begin investing when stocks are cheap end up with more retirement money, but after the turmoil of the past year, some find it hard to put their money in the market.

Asset managers and analysts say that those who invest in rock-bottom stocks of a bear market will see share values rise for decades.

But many in their 20s and early 30s are not buying rosy projections, due to immediate financial pressures and exposure to the longest recession since the 1930s Great Depression.

“I would keep all my money in cash,” said Alex Corbacho, a senior at Boston University.

The trend has some worrisome long-term implications. Stock brokers may find themselves largely shut out of a big customer base, and demand for equities will likely be crimped as investors favor safer havens, hurting the stock market’s prospects. It’s also unclear whether these young investors will have accumulated enough to fund their retirements when the time comes.

Corbacho is no stranger to markets. At age 13 he invested his birthday money and a matching donation from his father, $1,000 in total, in tech stocks only to feel the sting when the Internet bubble burst.

He carried the lesson with him in early 2008, after seeing signs of economic trouble as an intern at a Boston investment bank. He put the majority of his stock investments, which had reached about $5,000, into a certificate of deposit instead.

Corbacho doesn’t plan returning to stocks for a few years after graduation and is instead focusing on saving.

The recent market collapse has made holding cash for immediate expenses far more attractive to young people than investing, said Rodger Smith, managing director of Connecticut consulting firm Greenwich Associates.

“They are taken aback by how much they lost and how quickly they lost it,” Smith said.

The early exposure to such dramatic declines could restrain many from investing aggressively when they are older and have accumulated more money to put into the market, some say.

Asset managers, financial advisers and investors agree that young people will emerge from the financial crisis more educated, and more cautious, about managing their money.

“I do think they are taking a more practical and slightly more conservative view of the world,” said Michael Doshier, vice president of Fidelity’s Workplace Investing Group.

Corbacho said his generation should not expect to accumulate sudden wealth like some in the past.

“We might be a little smarter and a little wiser moving forward. We will have been more conservative and more observant and won’t have 65 percent of our life savings invested in equities,” he said.

Assets in U.S. retirement plans fell 22 percent in 2008 or nearly $4 trillion, with almost 75 percent of the drop in the second half of 2008, the Investment Company Institute found.

“These folks need to be resold on the idea that a 401k is a long-term investment,” said Smith, who oversees a profit-sharing plan for his firm and advises younger investors.

LONG-TERM CONCERNS

Financial advisers have long suggested that those further from retirement invest more heavily in equities, then switch to less risky assets as they near their golden years.

But the portfolios of those in their early 20s don’t reflect that advice. At Fidelity Investments, those 20-24 years old invest 31 percent of their 401ks in equities, compared to those 50-59 years old with 35 percent equities investments.

Overall, those saving for retirement have pulled back from stocks. In June, 48 percent of all Fidelity 401k participants were in equities, down from 53 percent a year ago.

Those in the investment industry say young investors should buy stock early and often.

“The key message is that it’s not a bad time for everybody,” said Christine Fahlund, senior financial planner at T. Rowe Price.

Ita Mirianashvili, a 35-year-old fellow at Massachusetts Institute of Technology’s Sloan School of Management, has confidence in long-term stock market prospects.

“I know the downturn cycle we are in will continue for some time but it will come back,” she said outside a MIT class that simulates a stock trading room.

But concerns about inflation, heavy government spending and rising bankruptcies has left many young investors uncertain.

“It’s still difficult to be bullish … for the long-run,” said Ashan Walpita, a 2009 Boston University graduate and former president of the school’s finance club.

Other short-term obstacles may hold young investors back. Employer-sponsored retirement plans often give people their first market exposure but with many graduates not finding work, they are yet to get started on making investments.

(Editing by Mark Egan and Cynthia Osterman)

‘Yes We Can’ vs. ‘Tell Washington No’:

Public passions seen rising on health care overhaul

Public passions are rising on health care overhaul

WASHINGTON — Booed, jeered and occasionally cheered in a raucous session with the public, a Democratic senator said Monday that other lawmakers can expect the same as they face voters on the divisive issue of overhauling health care.

“I wouldn’t be surprised if that’s the harbinger of things to come,” Pennsylvania’s Sen. Arlen Specter said a day after facing the rowdy crowd in Philadelphia. A House member who was surrounded by protesters shouting “Just say no!” to Democrats’ health plans in Texas over the weekend accused Republicans of organizing the opposition.

“This mob … did not come just to be heard, but to deny others the right to be heard. And this appears to be part of a coordinated, nationwide effort,” Rep. Lloyd Doggett, D-Texas, said in a statement. “What could be more appropriate for the ‘party of no’ than having its stalwarts drowning out the voices of their neighbors by screaming ‘Just say no!’”

With Congress’ monthlong recess looming, lawmakers are encountering growing public doubts about President Barack Obama’s push to remake the system for providing medical care, evident in polls that find confidence in the president’s handling of the issue has fallen since January.

Turn Your Head and Gag!

The White House is determined to frame the debate on its terms this month and counter fears about government-run insurance plans, a growing federal deficit, the impact on small businesses, abortion and end-of-life provisions — all issues that have dominated the health care debate. Political parties and special interest groups will add to the cacophony by spending millions of dollars on competing ads.

For lawmakers such as Specter and Doggett, the weekend events captured the public mood and the obstacles for the Obama administration.

At Specter’s forum Sunday in Philadelphia, some chanted Obama’s “Yes we can” campaign slogan, while others carried signs that said, “Tell Washington no.”

Specter and Health and Human Services Secretary Kathleen Sebelius faced an antagonistic, standing-room-only crowd at the National Constitution Center. Specter said he thought political organizations orchestrated some of the commotion, but individuals with serious concerns — some in dire medical conditions — were there as well.

“I do think there’s a big concern in America,” Specter said in an interview Monday. “We heard it yesterday about the growing deficit and national debt.”

Specter is a recent Republican-turned-Democrat who indicated earlier this year that he’s open to a government health insurance plan that would compete with private insurers, an idea backed by Obama and many Democrats.

Four of five congressional committees have approved versions of health care bills, but lawmakers fell short of Obama’s deadline for the House and Senate to vote on bills before their August recess. That sets up a September showdown on the legislation and all sides have moved into high gear.

The House has begun its recess, with the Senate to follow on Friday, as lawmakers continue to work on bipartisan legislation.

Frustrated with the pace of those talks, Democratic leaders promised to push a sweeping health care bill through the Senate whether they get Republican support or not.

Sen. Chuck Schumer, D-N.Y., the third-ranking Senate Democrat, raised the prospect of the leadership crafting a bill to Democratic specifications and using a rare legislative procedure to expedite it.

“We will have contingencies in place,” Schumer told reporters on a conference call. “These plans will likely be considered as a last resort, but they are on the table.” He would not elaborate.

After numerous delays, three Democrats and three Republicans on the Senate Finance Committee are facing a Sept. 15 deadline to wrap up secretive talks and come up with a plan.

“If we cannot produce a bipartisan solution by then, you have to wonder if the Republicans will ever to be willing to agree to anything,” Schumer said.

However, one of the negotiators — Republican Sen. Mike Enzi of Wyoming — said Monday he did not recognize such a deadline, and another, Sen. Olympia Snowe, R-Maine, said: “I don’t like deadlines.”

After those objections were voiced, Finance Chairman Max Baucus, D-Mont., said that senators were looking at a target date internally but “the main thing is we got to get it right.” Baucus said a draft bill would be ready by the end of this week.

Senators have plenty of action on the Senate floor this week, including a vote on Judge Sonia Sotomayor’s Supreme Court nomination, but health care is still a focus. Senate Democrats are lunching at the White House Tuesday and will hear from White House adviser David Axelrod and Deputy Chief of Staff Jim Messina at a closed-door session Thursday.

Schumer said Democratic leaders continue to look at invoking a procedural maneuver that would allow them to pass the health bill with 51 votes instead of 60. That route is viewed as a last resort, in part because it would probably limit the breadth of policy initiatives.

On the same call, Sen. Robert Menendez, D-N.J., accused Republican leaders of trying to hinder bipartisan progress to deny Obama a political victory.

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, R-Ky., scoffed at the complaints. He noted that Schumer himself hasn’t committed to supporting whatever the Finance Committee negotiators produce and that other Democrats have also criticized the plan that’s taking shape.

“Seriously, how can any Democrat who doesn’t support what the bipartisan group of Finance members is working on complain about there not being a bipartisan approach?” Stewart asked. “Has Sen. Schumer or anyone in the Democrat leadership offered a bipartisan bill?”

Schumer and many other liberals favor a strong new government-run insurance plan that would compete with private insurers, and all the plans approved so far have included that. But Republicans nearly uniformly oppose a new public plan, saying it would drive private insurers out of business, so the Finance negotiators are looking at a system of nonprofit health co-ops instead.

Schumer said negotiations on the Finance bill were continuing.

“No one’s drawing any lines in the sand right now, but I feel very strongly we need a public option and that fight is continuing,” he said.

Associated Press writer Erica Werner contributed to this report.

General Electric Co. rose the most in three months after U.S. Representative Barney Frank said manufacturers that already own finance businesses should be allowed to keep the units under revised banking rules.

GE increased 92 cents, or 7.5 percent, to $13.18 at 10:27 a.m. in New York Stock Exchange composite trading. The shares earlier climbed 8.8 percent, the biggest intraday gain since April 13.

GE, Harley-Davidson Inc. and companies that already have finance arms or industrial-loan businesses known as ILCs should be able to retain them without being subject to Federal Reserve oversight of their manufacturing operations, Frank said in an interview with Bloomberg News yesterday. Frank, a Massachusetts Democrat, heads the U.S. House Financial Services Committee.

“While numerous uncertainties remain, we are reducing our probability assumption for a costly separation to 25 percent from 50 percent and this drives our higher target,” Terry Darling, an analyst with Goldman Sachs Group Inc., wrote today in a report. “Greater potential for a manageable regulatory outcome should prompt investors to focus on longer-term benefits of economic and credit stabilization to GE shares.”

Darling raised his 12-month share-price estimate for GE to $15 from $13 and changed his rating to “buy” from “neutral.”

GE Capital

GE, the world’s biggest non-bank financial company, said July 28 during a Webcast meeting with analysts that it has been “very active” in opposing any rules that might force it to split off its GE Capital finance unit, which has $557 billion in assets. GE is also the world’s biggest maker of power-plant turbines, locomotives, medical-imaging machines and jet engines.

Steven Winoker, an analyst at Sanford C. Bernstein & Co. in New York, raised his estimate for GE’s 2009 per-share profit by 3 cents to 99 cents. He lowered his 2010 estimate by 3 cents to 94 cents a share on concerns profit growth in the non-finance divisions may slow.
“The risk/reward balance is improving over a longer, about three-year, time horizon,” Winoker wrote in a note to clients today. “However, we believe the stock is likely to remain range-bound in the near term due to skepticism concerning GE’s earnings power and the potential for dilution.”

Credit-default swaps protecting against a default by GE Capital fell 35 basis points to 260 basis points, according to CMA DataVision.

Financial Regulation

President Barack Obama’s administration is seeking to tighten regulation of the financial industry to reduce the likelihood that any one company’s potential failure would hurt the broader markets and economy. Frank, a leader in Congress in transforming Obama’s plan into legislation, said this week he plans to get the bill through the House by October and to Obama for his signature before the end of the year.

“The Fed was worried about being a regulator, about being held responsible for a lot of industrial activity,” Frank said. “We will work with them to resolve that issue.”

There are ways to allow companies like GE to stay intact and have their finance arms regulated more closely, Frank said. The structure didn’t cause the financial crisis, and it shouldn’t be an obstacle to regulation, Frank said.

“This particular arrangement is not part of the problem,” Frank said.

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.