U.S. Oil Prices Fall to Six-Year Low

Abstract: Oil prices fell to six-year lows on Monday in the face of concerns that a glut in the United States was outpacing already-brimming storage facilities. Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices. The direction of oil prices, which had risen sharply from January lows, has fallen back in recent days. Traders are now focused on the second quarter of the year, when demand for oil is traditionally weak because of the end of winter and scheduled refinery shutdowns for maintenance. On Monday, the price of West Texas Intermediate crude, the main United States benchmark, fell about 2 percent to about $44 a barrel, a six-year low, while Brent crude, the international benchmark, fell by about 2 percent to about $53 a barrel. Video As the price of crude oil fluctuates, why some countries are faring much better than others. Credit Credit Carlos Garcia Rawlins/Reuters Oil markets continue to focus on OPEC because its members could quickly alter the markets’ balance by cutting production. But while some members, including Nigeria and Venezuela, would like to see cuts, Saudi Arabia and its Gulf allies show little inclination to change the policy they agreed to in the fall: Protect market share regardless of what happens to prices. While OPEC’s competence at managing the market was always much in question, the organization’s decision to stay on the sidelines has opened the way for volatile price movements. In the view of market participants, OPEC’s role as the swing producer has moved to the United States and, in particular, to the producers of oil from shale rock. These companies have helped increase American production by more than four million barrels a day since 2009, far more than the combined increases in the rest of the world. Many analysts say that with low prices discouraging investment in drilling, production growth in the United States will level off and even begin to decline. But when this change will happen is a matter of speculation. A group of oil companies working in Texas and North Dakota and elsewhere is far different from the gatherings of OPEC oil ministers that decide whether to cut or increase supply at meetings in Vienna. “A new math for oil has emerged,” said Bhushan Bahree, an analyst at IHS Energy, a business information company in Washington. “The new math is the mix of variables that shape the pace and level of U.S. oil production as well as investment in high-cost sources of supply.” Mr. Bahree said that while the market was trying to find a new equilibrium, “it is likely to flounder in the search for a new price range.” OPEC made its own guess about when production might begin declining in the United States in its monthly oil report, published on Monday. Asserting that the output of a typical shale well can fall by 60 percent annually and noting the continued decline in the number of drilling rigs operating in the United States, OPEC suggested that “a drop in production can be expected to follow, possibly by late 2015.” While that might seem like encouraging news to oil producers, it also means that OPEC, or at least Saudi Arabia, may be in no hurry to cut production at the group’s next meeting, in June. The Saudis argue that over time, economics will work in their favor because their oil costs a few dollars a barrel to produce, while oil from shale, deepwater wells and Canadian oil sands is much more expensive. The Saudis also contend that any move to prop up prices now will encourage more investment in production in the United States and elsewhere. In a speech on Sunday in Doha, Qatar, Ibrahim al-Muhanna, an adviser to the Saudi oil minister, also seemed to counsel patience. “We have a long-term view, and we do not make knee-jerk reactions to headlines,” he said, according to a text of his speech. Mr. al-Muhanna said he was confident that demand from a strong global economy would prove sufficient to soak up supplies and that “prices will firm up.” OPEC’s report on Monday was less sanguine. The group forecast that demand for its crude would average about 29.2 million barrels a day in 2015. That is about 800,000 barrels a day less than OPEC said it was producing in February.


French Nun Says Church to Rule on Cure by John Paul II

Abstract: PARIS, March 30 — If the story Sister Marie Simon-Pierre told Friday is true, then Pope John Paul II exercised miraculous powers from beyond the grave. A proven physical miracle is an important qualification on the road to sainthood. Smiling and strong-voiced, the 46-year-old nun stepped out of her quiet life of prayer and good works and stood in front of a wall of cameras to proclaim that the pope cured her of Parkinson’s disease two months after his death in 2005. “I have been cured,” she told journalists gathered for a news conference in Aix-en-Provence. “My healing was the work of God through the intercession of Pope John Paul II.” But she refused to call her recovery a “miracle,” saying such a designation is the responsibility of the Vatican. “All I can say is that I was ill and now I am cured,” she said. “It is for the church to say and to recognize whether it is a miracle.” The veracity of her story is crucial to making Pope John Paul II a saint. The pope has already been put on a fast track to sainthood. Only 26 days after the pope’s death, Pope Benedict XVI, his successor, waived the five-year waiting period to begin the process of beatification, the first step toward sainthood. But John Paul needs one verifiable miracle to be beatified, which means that one has reached heaven and can be referred to as “blessed.” Sister Marie Simon-Pierre’s case has been chosen as the first potential miracle. A second miracle is generally required for canonization as a saint. Miracles can be waived for those who die as “Christian martyrs.” The French nun’s case had been revealed during the course of a Vatican investigation on behalf of Pope John Paul’s sainthood, but only on Friday did she publicly recount her story. Dressed in a white nun’s habit and veil with a black sweater, and carrying a knapsack over her shoulder as she walked through a garden, she seemed slightly overwhelmed by the media attention. She was told in 2001 that she was suffering from Parkinson’s, a degenerative disease of the nervous system. Over time, she said, her symptoms worsened until she had difficulty walking, writing and driving a car. She could not sleep. Her hands trembled. Her body was racked with pain. The late pope became an inspiration for her because of his own very public suffering from Parkinson’s disease in the decade before his death on April 2, 2005. It also became too painful for her to watch him on television, because, she said, “to be honest, I saw myself in the years to come in a wheelchair.” But her fellow nuns, the Little Sisters of Catholic Maternity Hospitals in Puyricard near the southeastern town of Aix-en-Provence, prayed to the pope for her recovery. In June 2005, exactly two months after the pope’s death, she asked to be relieved of her duties as supervisor of a 40-bed maternity ward. Her mother superior told her to write John Paul’s name on a piece of paper, but the words were illegible. Later that night after her evening prayers, she heard a voice from within telling her to pick up a pen and write. She followed her lights, and was stunned to see that she could write legibly again. When she awoke early the next morning, she said she felt “completely transformed.” “I felt that my body was no longer the same, and that I was no longer the same,” she said, adding that it was “a bit like a second birth.” After her recovery, she told one of her fellow nuns: “Look at my hand. It is no longer trembling. John Paul II has cured me.” She said that her neurologist was astounded when he saw her soon after her transformation. She has not had to take medication or seek treatment since. Last year, she was transferred to another maternity hospital in Paris run by her order. Only once before has a pope put a candidate for sainthood on a fast track. In 2003, Pope John Paul II accelerated the canonization process for Mother Teresa, the winner of the Nobel Peace Prize for her care of the poor of Calcutta who died in 1997. But a grass-roots campaign to make the late Pope John Paul II a saint began immediately after his death. Cries of Santo subito! — Sainthood now! filled Saint Peter’s Square during his funeral. Msgr. Slawomir Oder, a Polish cleric in the diocese of Rome, has organized an official campaign to push for quick sainthood. He has said he has received reports of more than 130 miracles attributed to the late pope. But he is focusing on the case of Sister Marie Simon-Pierre because other cases may take longer to verify. “The scientific evaluation of cancer cures would have required a wait of 8 to 10 years,” he said recently. Pope Benedict has given mixed signals on his approach to sainthood. In addition to putting the late pope’s canonization on a fast track, he fueled speculation that sainthood was imminent when he expressed hope last May during a trip to Poland, John Paul’s homeland, that the process would conclude “in the near future.” As a cardinal, however, Pope Benedict said several times that he was not in favor of naming an excessive number of saints. He was believed to have been aligned with conservatives who looked askance on Pope John Paul’s record canonization of saints during his 26-year papacy. Sister Marie Simon-Pierre and Archbishop Claude Feidt of Aix-en-Provence are now heading to the Vatican, where her case will be presented. They will attend a Mass in Saint Peter’s Square marking the second anniversary of John Paul’s death, when the dossier of documents for beatification will be turned over to the Vatican’s congregation for saints. A team of doctors and other experts appointed by the Vatican will decide whether her recovery was a miracle. Described by her fellow sisters as a gentle woman who had intended to keep her identity secret, the nun said Friday that in her decision to speak publicly, she drew inspiration from Pope John Paul II. “He never shied away from the cameras,” she said. “And I believe today he gives me necessary strength, and I think that today he is with me.”


Trader Went Undercover to Expose a Minneapolis Ponzi Scheme

Abstract: SITTING in a Minneapolis mansion and listening to a charismatic investment manager describe a currency trading system that kept earning handsome returns year after year, Arthur F. Schlobohm IV was certain he had stumbled onto a Ponzi scheme . A longtime trader who started running tickets on the floor of the New York Stock Exchange as a teenager, Mr. Schlobohm, known as Ty, knew that Minneapolis, his home for nine years, was too small a town for a $4.4 billion investment fund to have escaped his notice. It had taken him just a few Google searches to discover that the fund’s manager, Trevor G. Cook, had been suspended twice by the National Futures Association and been fined $25,000 for using false information to open a trading account for a customer. Calls to contacts in Switzerland and Kuwait also raised doubts about Mr. Cook’s boasts about deal-making abroad. Yet Mr. Schlobohm later found himself back in Mr. Cook’s mansion, surrounded by a room full of his neighbors, many of whom were about to hand their life savings to a charlatan. “If I could have just leaned over and whispered in someone’s ear, ‘Don’t invest in this! Just trust me!,’ there would be a family out there now with kids that could go to college,” Mr. Schlobohm recalls of the meeting, which took place 18 months ago. But he couldn’t do that. At the time, Mr. Schlobohm, now 37, was working as an informant for the Federal Bureau of Investigation . Wired to record Mr. Cook’s sales pitches and carrying a hidden camera, Mr. Schlobohm gathered evidence for at least four months as the Justice Department zeroed in on the scheme. Mr. Cook pleaded guilty to mail and tax fraud last summer and was sentenced to 25 years in prison for orchestrating what ultimately became a $160 million swindle. William J. Mauzy, a lawyer who has represented Mr. Cook, did not respond to repeated requests for comment and for an interview with Mr. Cook. That the authorities brought Mr. Cook to justice is undoubtedly a positive outcome. But Mr. Schlobohm’s journey as a whistle-blower, and some of the financial losses that still occurred even though authorities were closely monitoring Mr. Cook, also underscore the limitations of the system. During the period when Mr. Schlobohm helped the F.B.I. to gather evidence, from April through July 2009, at least $16 million flowed into Mr. Cook’s fund — and disappeared. From the time securities regulators first had credible information that he was engaged in a fraud and when the authorities shut down his fund, December 2008 to July 2009, some $35 million flowed into his coffers — funds that afforded Mr. Cook a lifestyle that included an expensive gambling habit, a collection of Fabergé eggs, fancy cars and the construction of a casino in Panama. “There was a tremendous amount of guilt being there,” watching Mr. Cook lure investors, said Mr. Schlobohm in an interview, the first in which he has spoken publicly about how he helped put Mr. Cook behind bars. “Knowing this was a fraud with the highest degree of certitude, and having to watch people in the process of losing their life savings, was extremely difficult.” The United States attorney for Minnesota prosecuted the case against Mr. Cook, and the Commodity Futures Trading Commission and the Securities and Exchange Commission are both pursuing civil suits against Mr. Cook and helped with the federal investigation. Those agencies point to the Trevor Cook case as an example of the positive lessons authorities learned from the Bernard L. Madoff scandal and other regulatory debacles. (In the Madoff case, tipsters warned regulators for years of problems, but they did not take action until Mr. Madoff’s fund collapsed.) For all of the Justice Department’s efforts, though, only about 5 percent of the $160 million invested in Mr. Cook’s scheme has been recovered. And for his part, Mr. Schlobohm says that his time as a whistle-blower was often an ordeal, leaving him worried about his safety and that of his family. After he began acting as an informant, he was spending considerable time on the case. He and his employer, an investment company, agreed that it was better for him to quit than to risk dragging the firm into the probe. “There were definitely times when I was fearful,” he says. “I had to ask questions and dance on a tightrope, pretending I was going to help them bring money in without being obvious I was working with the federal regulators. They certainly knew what they were doing was a fraud, so I was surprised that they weren’t thinking that maybe someone else had discovered it.” ONE day in early 2009, Ty Schlobohm was visiting the 117-year-old Romanesque mansion that Mr. Cook had bought for $2.8 million and outfitted as a modern trading floor, where walls of flat screens flashed currency prices from around the globe. “I was walking down the stairs, and on the first floor they had a big conference room,” Mr. Schlobohm recalls. “There sat no less than 25 women, all north of 65 to 70 years old, at an investment seminar where one of the salesmen was waxing poetic about the strategy. I was fairly certain at that point that I was looking at some degree of fraud.” That epiphany, backed up by his research into Mr. Cook’s trading strategy, which included claims of no-interest loans from a Jordanian bank, led Mr. Schlobohm to take a raft of documents to the authorities. “I realized,” Mr. Schlobohm says, “that in what was somewhat of an unremarkable financial career, this was that fork in the road where I could do something good.” There had already been others who had raised questions about Trevor Cook. The Commodity Futures Trading Commission, a federal agency that regulates commodity markets and monitors foreign currency trading, got a full report on Mr. Cook’s suspension in 2006. Then, in April 2008, Duke Thietje, a Florida investor, filed a lawsuit in a Minnesota state court against Mr. Cook and his firm, Universal Brokerage Services, contending that Mr. Cook lost $450,000 he had turned over to him in 2005 to invest in foreign currencies. Mr. Thietje abandoned his lawsuit in the fall of 2008. But around that time, his lawyer turned over copies of his filings to the C.F.T.C., providing that agency with its second warning about Mr. Cook. The C.F.T.C. would not comment on the documents, in part because its civil fraud charges against Mr. Cook and his companies are still pending. After examining Mr. Thietje’s allegations, the C.F.T.C. decided that it lacked the jurisdiction to do anything about Mr. Cook, according to people close to the investigation who spoke on the condition of anonymity because some charges are still pending. It wasn’t until March 2009, when Mr. Schlobohm contacted both the C.F.T.C. and the United States attorney in Minneapolis with his information about Mr. Cook, that the C.F.T.C. began to connect the dots. That was made more difficult because Mr. Cook’s ventures went by an ever-changing lineup of names: Universal Brokerage Services, UBS Diversified, Oxford Global, Market Shot, the Basel Group, Crown Forex. None of them, however, were registered with either the Commodity Futures Trading Commission or the S.E.C. So even after Mr. Schlobohm provided his own research pointing to a Ponzi scheme, regulators said they had limited options as to how they could act. According to two senior regulatory officials speaking on the condition of anonymity because the civil cases are still in court, the agencies could not simply walk in and demand to see the firms’ books and records without running the risk that the group would fold up shop and disappear with investors’ money. And the agencies thought that convincing a judge that the Cook firms’ assets should be frozen required more evidence than they had from Mr. Schlobohm, the officials said. Mr. Cook was indeed sending some of his victims’ funds to foreign currency trading accounts, where his unauthorized trading was losing millions of dollars. In the end, regulators discovered 21 domestic bank accounts and 27 brokerage accounts involved in the scheme, as well as 19 foreign accounts at 17 institutions in 12 countries, many of which zealously guard the identity of depositors. Mr. Schlobohm had few doubts, however. Mr. Cook was telling potential investors that he was producing monthly returns of one-half to 1 percent, month after month, without a loss, over a period that included one of the worst investment markets in modern times. Mr. Cook claimed to be generating those profits by performing a so-called carry trade that allowed him to game the differences on currency yields in various countries. He used investors’ money, he said, to buy high-yield securities denominated in a currency like the Australian dollar. He then sold low-yielding securities denominated in United States dollars, and pocketed the difference in returns. Next, he said, he used interest-free loans to set up a mirror-image trading position, creating a perfectly hedged transaction that, he said, produced guaranteed profits. The free money, he said, came from a bank in Jordan, which, because of Shariah Islamic law, was not allowed to charge interest. Mr. Cook said the difference between the two trading positions generated annual returns of 10 percent to 12 percent — year after year after year. In reality, what Mr. Cook was running was a plain-vanilla Ponzi scheme, in which he simply used money from new investors to pay off earlier investors and maintain the mirage that his funds were earning handsome returns. EARLY in his discussions with the F.B.I., Mr. Schlobohm recalls, an agent informed him “that Trevor Cook had been on their radar screen before,” but the bureau had been unable to pin anything on him. The F.B.I. took the lead in the Cook investigation, focusing on gathering evidence for a criminal prosecution rather than on immediately shutting down the fraud and securing investors’ funds. An F.B.I. spokesman declined to comment on the investigation. Unlike civil cases, criminal cases often require that investigators amass evidence of both the crime and the perpetrator’s intent before producing an indictment — usually translating into longer, more challenging investigations. Given those hurdles, the F.B.I. came to rely heavily on Mr. Schlobohm to gather information for its case. Wearing two microphones and carrying a hidden camera, he attended at least 10 meetings in which Mr. Cook or his associates tried to raise money from investors. Some parts of the undercover operation didn’t go smoothly. With tape recorders strapped to him, Mr. Schlobohm was reluctant to go to the bathroom at the mansion for fear of discovery. “I was crossing my legs and chewing on my knuckle,” he recalls, and says that he once was forced to drive to a nearby F.B.I. building to relieve himself. Other aspects of his duties were also tedious. The special agent assigned to Mr. Schlobohm had no expertise in financial crimes, and Mr. Schlobohm said he had to spend hours explaining carry trades and hedges and foreign currency markets to the agent. “I had a wheelbarrow of information on this fund in March 2009,” Mr. Schlobohm says. “On a daily basis, I was saying all you have to do is ask an hour’s worth of questions to understand that Ledger A will not match up with Ledger B in terms of assets. That could be completed in a day. And I just kept being given ambiguous answers, that there was a process, there was a protocol, and that they could not just shut it down.” Officially, the C.F.T.C. and the S.E.C. said the case was an example of a successful multi-agency investigation. But in truth, with the F.B.I. and Justice Department running the undercover operation, the regulatory agencies were sidelined. In April 2009, after the undercover operation began, the United States attorney’s office specifically asked the civil regulators to halt any overt investigations to prevent tipping off the targets, according to two regulatory officials. It wasn’t until late June 2009 that securities regulators got the go-ahead from prosecutors to finally subpoena the records of Mr. Cook’s companies. The next month, investors first became aware that something might be amiss in Mr. Cook’s mansion when a group of Ohio investors filed a lawsuit against Mr. Cook and his companies, contending that they had refused to let the investors withdraw their money. That private lawsuit — not the federal investigation — essentially shut down Mr. Cook’s operation because it caused investors to scramble for answers about their investments and to get a court order to freeze assets. The S.E.C. and the C.F.T.C. filed civil suits against Mr. Cook and others in November 2009, and the United States attorney filed a criminal case against Mr. Cook this year. Peter Silverman, a lawyer who represented the Ohio investors, said that many financially savvy people could have seen signs of a fraud in Mr. Cook’s investment materials. “I think it was inexcusable that the authorities did not move in more quickly to stop people from investing more money,” he says. Joseph T. Dixon III, the chief of the fraud and public corruption unit of the United States attorney’s office for the District of Minnesota, said in an interview that the case progressed as rapidly as possible, given the circumstances. “Criminal cases take some time to put together,” says Mr. Dixon. “We have to be able to prove our charges beyond a reasonable doubt.” Mr. Dixon rejects comparisons of the Cook and Madoff cases. “We didn’t just sit on this information,” he says. “We moved very rapidly. There is a tension between trying to prevent a fraud from happening and having to build a case we believe we can take into court.” He contends, however, that securities regulators were free to take action sooner if they wanted. “Categorically at no time did we ever interfere with a regulatory agency’s ability to move,” he said. Mr. Cook, after pleading guilty to one count of mail fraud and one count of tax evasion, was sentenced to 25 years in prison. He was ordered to pay $158 million in restitution. But at last count, only about $9 million had been recovered. Many people close to the case say they believe that Mr. Cook stashed money away — suspicions that were confirmed in August when investigators first found thousands of $100 bills and gold and silver coins hidden in the walls of his brother’s basement, then uncovered a duffel bag full of Iraqi dinars, Turkish lira and other currencies in a locker at the Mall of America. MR. SCHLOBOHM says his experience shows that for many whistle-blowers, the risks can outweigh the rewards. But while he has mixed feelings about how the investigation proceeded, he has no qualms about his decision to cooperate with the authorities to shut down Mr. Cook’s operation — and he says he hopes that others in the investment arena will see it as their duty to do the same. “I was doing this, and continued to do it, for moral reasons,” he says. “I was finally in the position to maybe not make a bunch of people money but maybe to save some people their life savings.” Mr. Schlobohm says that a few weeks into the operation, his contact in the F.B.I. offered to try to arrange some compensation, an offer he says he rejected. The F.B.I. declined to comment. There were significant costs, however. In April 2009, shortly after he had started working undercover, Mr. Schlobohm found his work as an informant had begun to overtake his regular job. Because he was spending significant time away from the office, he had to tell his employer what he was doing. Although his employer was supportive, Mr. Schlobohm and his bosses agreed that he should leave the firm to avoid drawing it into a financial morass. (For the same reason, both Mr. Schlobohm and the company asked that it not be named, although a senior official there confirmed his account.) “I had to make a decision — either I could continue on with this, which was taking a considerable amount of resources,” or keep his job, he says. “And I chose to resign, to finish this out. So it was a financial risk to myself.” Now, he trades for his own account and on behalf of a New York investment firm. He was worried that his undercover work might ruin his career in financial services and, as his mind wandered amid all of the secret taping and debriefing he was doing, he worried about the safety of his family. Mr. Schlobohm says that because regulators and law enforcement authorities are more reactive than proactive when it comes to financial crimes, it’s up to members of the industry to alert people about frauds before investors are hurt. “The private sector — people like myself, people that are allocators of capital, people that are professional analysts in the asset-management world — have the highest degree of knowledge to be able to sniff this out in a minuscule amount of time, like I did,” he said. Mr. Dixon, the prosecutor, agrees: “We need citizens in the business community to come forward with information so we can move forward.” For him, the lesson of the Trevor Cook case is, in part, “the importance of business professionals stepping up and bringing us information — even if there is no financial incentive and sometimes may be financial risk to them.” There is not, Mr. Schlobohm said, a culture of silence among investment firms and managers. But there are subtle pressures. “If I’m a large university or a huge hospital, and I want you to consult or manage hundreds of millions of my dollars, I want you out there making money,” he says. “I’m not giving you money to go off and be a vigilante, a financial vigilante of sorts.” The upside of being a whistle-blower might be improving. The Dodd-Frank Act, the regulatory overhaul signed into law by President Obama this summer, included provisions to strengthen whistle-blower protections and to encourage people to come forward with information about investment frauds. Now the S.E.C. and the C.F.T.C. can reward whistle-blowers with up to 30 percent of any amount over $1 million recovered from an enforcement action. But because Mr. Schlobohm’s revelations about the Trevor Cook case took place in 2009, these new provisions don’t apply to him. An earlier S.E.C. whistle-blower program applies only to insider trading cases, but an Internal Revenue Service program might apply, given the tax charges in Mr. Cook’s case. Under the I.R.S. program, Mr. Schlobohm might be eligible for up to 30 percent of the taxes and penalties in excess of $2 million collected by the I.R.S. Mr. Schlobohm has hired Phillips & Cohen, a Washington firm that specializes in whistle-blower cases filed under the False Claims Act, to represent him. But he says that he doesn’t know if he would accept a reward if one were offered, and that if he did he would probably use it to help victims of the fraud. “If I were to receive some reward, I think that would be great,” says Mr. Schlobohm. “But that’s not why I did it.”

Ponzi Schemes
Federal Bureau of Investigation
Whistle-Blowers
Frauds and Swindling
Schlobohm Arthur F IV
Cook Trevor G


Yoga Classes, Even With a Fused Spine

Abstract: I WENT to yoga classes fairly often before I had a spinal fusion at 17. The poses helped with flexibility and relaxation, even if they didn’t have a straightening effect on my S-shaped scoliosis. But yoga didn’t have the same charm after surgery: The long rods and screws in my back kept me from curling like a cat or bending into a cobra pose. After moving to New York City, where there is something for everyone, no matter how niche the need, I found a studio that not only worked with people with scoliosis but also those with spinal fusions: Yoga Union Center for Backcare and Scoliosis in Manhattan. Even one of the instructors, Mimi Rosetti, has had a spinal fusion. “The goal is not to get around your spinal fusion — that’s fixed,” Ms. Rosetti told me. “The goal is figuring out how to support it. The goal is comfort and longevity.” In the airy, wood-paneled studio, ropes hang from the walls, and many other props — blocks, belts, chairs and blankets — are packed onto shelves. The classes do not feature the rapid vinyasa flows of many other New York studios. Each pose is explained and demonstrated by an instructor before the rest of the class gingerly follows suit. Modifications are doled out for the different afflictions in the room, be they pinched nerves or herniated disks. And the poses, in all their variations, are held for a minute or so before the instructor takes questions from the class. Usually, everyone tries it again. Image Hess Kim striking a pose. Credit Agaton Strom Deborah Wolk, who founded the studio with Alison West in 2007, said it was based on an obvious need: “Everyone seemed to have a back problem.” Ms. West said that their teaching method was designed to create “manageable adjustments,” so that “the full spectrum of yoga” could be available to all. Since even gentle backbends seemed impossible for me, I was skeptical that I could achieve the lift and release they provided during my teenage years. But from the first time I was helped into a sling to try a downward-facing kneeling pose described as hanging salamba adho mukha virasana, I was a believer. Leaning my hips into the sling, I walked my feet up the wall behind me and slowly tipped forward to rest, upside-down, like a hanging bat, my legs tucked to my chest and into the wall. After a few minutes, the tension just slid away — a revelation. Ms. West calls it “a mild spinal traction using your weight.” I am not the only fused yoga enthusiast who attends class. Iris Degutz, 70, credits the studio with saving her life. Her spine was fused when she was 41 because of scoliosis, a procedure that decreased her back pain significantly but left her feeling as if she were, at times, “wearing a straitjacket.” Before she started working with Ms. Wolk seven years ago, she felt very weak, as if she were “hanging off of her fusion.” She credits yoga with helping her alignment, posture and mobility. “It makes me much more active,” Ms. Degutz said. “I feel more alive.” Of course, there are limitations. “I’ve learned my body,” she said. “I know what to do with it, and I know what’s safe.” The instructors are similarly cautious. “Some people can blow through yoga class and feel great,” Ms. Wolk said. “But injuries come from people doing the same wrong thing over and over again. Most people have to work with a yoga instructor who knows what they’re doing.”


Jiminy Cricket! Bugs Could Be Next Food Craze

Abstract: In October 2012, Megan Miller walked out of a San Francisco pet store carrying a bag filled with mealworms squirming in soil. When she arrived at her apartment, she took them straight to her kitchen. Since mealworms take on the flavor of whatever they’ve been eating, soil included, Ms. Miller plucked them from the dirt and placed them in a bowl of oats and apples and let them munch for several days. Then, following instructions she had found on the Internet, she blanched the worms in boiling water, roasted them and plopped them into her blender along with dried plums, cinnamon, coconut oil and banana. She shaped them into bars and chilled them in the refrigerator. Soon, she experimented with live crickets as well. “I really had to buck up,” she says of the experience. “There are, like, thousands of insects crawling over one another.” Ms. Miller had tasted crickets and mealworms during trips to Mexico and Southeast Asia, but this was her first foray into insect cooking. It was not to be her last. The following summer, she founded a company, Chirp Farms, with a business partner; they parted ways after several months when he became more interested in raising crickets than baking them. In December, Ms. Miller left her job as the head of research and development for the United States unit of Bonnier AB, the global media company, and began working full time in the fledgling field of insect gastronomy. Along with two partners, Leslie Ziegler and Eric Woods, she founded Bitty Foods , a company that mills crickets and blends them with cassava and coconut. The result is a flour that the company sells online, along with cookies baked with the flour. Image Kevin Bachhuber is the founder of Big Cricket Farms, which can produce 50,000 pounds of crickets per month that are suitable for human consumption. Credit David Maxwell for The New York Times Ms. Miller and other American entrepreneurs in this field believe protein-rich insects, and crickets in particular, are poised to ignite a quinoa-like food craze. There are nearly 2,000 types of edible insects, but Ms. Miller decided to cook with crickets, partly for the practical reason that they were already being commercially farmed in the United States. And while roasted worms have a nutty flavor, the creatures tend to trip Americans’ gag reflex. Crickets, on the other hand, are associated with “pleasant summer nights and crickets chirping,” Ms. Miller says. Ms. Miller hopes Bitty Foods will appeal to people who follow a so-called Paleo Diet, which shuns carbohydrates and relies on meat, fruits and vegetables. She’s also marketing her crickets to gluten-free eaters, who spent $10.5 billion on products designed for them in 2013 and are expected to shell out $15 billion in 2016, according to the market research company Mintel. One cup of Bitty Foods’ cricket flour contains 28 grams of protein, and Ms. Miller believes it could replace wheat flour in everything from pasta to bread to cake. “My vision is that we’re going to boost the protein content of all the staple foods that we eat,” she says. “And we’re going to need a really sustainable and plentiful protein source to do that with.” Ms. Miller and other edible-insect entrepreneurs also think crickets could appeal to people concerned with environmental sustainability. The insects take just six to eight weeks to reach maturity and, because they don’t require much food, water or land and produce low levels of greenhouse gas emissions, they have a smaller carbon footprint than, say, a cow. A 2013 report by the United Nations Food and Agriculture Organization that extolled insects’ potential to help stabilize the global food supply, in fact, helped propel the edible-insect industry forward. After the report came out, “all of a sudden there were a ton of people who were superinterested in edible bugs,” says Kevin Bachhuber, who in May started Big Cricket Farms in Youngstown, Ohio. His farm is devoted exclusively to raising food-grade crickets for humans. (He follows more stringent sanitation procedures and uses higher-quality feed grains than do farms that provide crickets sold at pet stores to feed lizards.) Image The retail price for a 20-ounce bag is $20. Credit Peter DaSilva for The New York Times To get his business off the ground, Mr. Bachhuber called on Tiny Farms , a San Francisco-based edible-insect consulting company that assisted him with insect breeding, entomological research and expense modeling. Mr. Bachhuber’s 5,000-square-foot warehouse can produce 50,000 pounds of crickets per month. Inquiries have come from professional chefs, curious home cooks and nongovernmental organizations interested in mixing crickets into their packaged M.R.E.s, or meals ready to eat. For now, crickets and cricket flour are still relatively expensive. Mr. Bachhuber sells his crickets, which he ships frozen to customers, for $4.50 to $9 per pound. One cup of Bitty Foods’ cricket flour requires about 4,000 crickets, according to Ms. Miller. The retail price for a 20-ounce bag of her cricket flour is $20. By comparison, a bag of regular all-purpose flour typically costs around $1 per pound in grocery stores. Ms. Miller thinks that when crickets are more widely available for purchase, the price could drop. Bitty Foods currently sells several hundred bags of cookies each week through its website, according to Ms. Miller. In March, after giving a presentation at the TEDxManhattan conference, she got the attention of the Florence Group, a business that the celebrity chef Tyler Florence helped found. The company sells its California Crush wine at Target and is developing new product lines for Williams-Sonoma and Costco, in addition to serving as an incubator for culinary start-ups. Two weeks ago, the Florence Group, based in the San Francisco Bay Area, became an equity investor in Bitty Foods. “It tastes like dark toast,” Mr. Florence says of cricket flour. The plan is for Mr. Florence and Ms. Miller to fine-tune Bitty Foods’ flour and use it as a staple for the other products they create, which Mr. Florence says will “feel really familiar, but most importantly will taste delicious.” Cricket-flour pasta or muffins will have to be very appetizing to overcome Americans’ revulsion of eating insects, even cute ones like crickets. “Obviously there’s the gross factor, so you run the risk that no one’s going to buy it,” according to Kelly Goldsmith , assistant professor of marketing at Northwestern University’s Kellogg School of Management. “If you get just regular diners who are not foodies and not gluten-free to try these cookies, and they don’t taste great,” Ms. Goldsmith warns, “there will not be a repeat purchase.”

Food
Megan Miller
Insect
Bitty Foods
Tyler Florence
Cricket Insect


Opposition in Azerbaijan Vows to Step Up Protests

Abstract: MOSCOW — Opposition leaders in Azerbaijan vowed Monday to step up a nascent protest campaign against the authoritarian government of the former Soviet republic, despite a recent police crackdown on pro-democracy demonstrators. Emboldened by protests sweeping the Middle East, government opponents in Azerbaijan, an oil-rich, mostly Muslim country, have taken to Facebook and other social networking sites to organize a series of demonstrations in recent weeks, including one on Saturday, against the government of President Ilham Aliyev . “There is a criminal, authoritarian and corrupt regime in Azerbaijan, and the people of Azerbaijan no longer want to live under these conditions,” said Isa Gambar, the leader of the opposition party Musavat. “The processes going on internationally, in particular in the Arab countries, have inspired the people to fight for their freedom.” Mr. Gambar, who spoke by telephone from Azerbaijan’s capital, Baku, said his party would join a confederation of opposition groups at another protest on April 16. The opposition Islamic Party also announced that it would most likely hold its own demonstration this week to coincide with Friday Prayers. So far, popular support for the protest movement is hard to gauge. Recent demonstrations have drawn several hundred people at most, and have been no match for the columns of riot police sent to disperse them. At Saturday’s protest near Fountain Square in Baku, the police lashed out at demonstrators with clubs and bare fists, causing several injuries, witnesses said. There were also reports that the police had fired tear gas at demonstrators. As many as 200 people were detained, according to protest organizers. Most were later released, though at least 20 were sentenced to up to 10 days in prison on various charges. At least 15 opposition leaders were arrested in the days before the protest. On Monday a Baku court charged four opposition leaders with organizing mass unrest, a crime that carries a maximum sentence of three years. The authorities have not leveled such serious charges against government opponents in over five years, said Emin Huseynov, the head of the Institute for Reporters’ Freedom and Safety , based in Baku. “They are afraid of a repeat of what is happening in the Arab countries,” Mr. Huseynov said of the authorities. “These arrests were made to spread total fear.” Opponents have accused Mr. Aliyev of using Azerbaijan’s vast oil wealth to entrench himself and his family in power. He has ruled since 2003, when he took over the presidency from his father, Heydar. In recent years, opposition journalists and bloggers have been arrested, and political opponents squeezed out of power. Some observers warned against drawing too many parallels between Azerbaijan and countries like Egypt and Tunisia. Despite his democratic shortcomings, Mr. Aliyev has been credited with ensuring a modicum of stability in a country shaken by war and economic upheaval after the Soviet collapse. He has also maintained warm relations with the West, supplying energy to Europe and a transit route for the American-led military operation in Afghanistan. Government officials have pointed to the small size of the recent protests as evidence that they lack popular support. Even so, the recent unrest seems to have persuaded Mr. Aliyev to address some of the protesters’ grievances. Recently the authorities announced an anti-corruption campaign and dismissed several officials accused of graft. Faced with anger recently over rising food prices , Mr. Aliyev personally ordered the price of eggs to be lowered, said Ali Novruzov, a political blogger based in Baku. “The temperature in Baku is rising,” Mr. Novruzov said by telephone. “Since these protests have begun, there is hope of change.”

Azerbaijan
Aliyev Ilham H
Demonstrations Protests and Riots


At Global Economic Gathering, U.S. Primacy Is Seen as Ebbing

Abstract: WASHINGTON — As world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concern is rising in many quarters that the United States is retreating from global economic leadership just when it is needed most. The spring meetings of the International Monetary Fund and World Bank have filled Washington with motorcades and traffic jams and loaded the schedules of President Obama and Treasury Secretary Jacob J. Lew. But they have also highlighted what some in Washington and around the world see as a United States government so bitterly divided that it is on the verge of ceding the global economic stage it built at the end of World War II and has largely directed ever since. “It’s almost handing over legitimacy to the rising powers,” Arvind Subramanian, the chief economic adviser to the government of India, said of the United States in an interview on Friday. “People can’t be too public about these things, but I would argue this is the single most important issue of these spring meetings.” Other officials attending the meetings this week, speaking on the condition of anonymity, agreed that the role of the United States around the world was at the top of their concerns. Washington’s retreat is not so much by intent, Mr. Subramanian said, but a result of dysfunction and a lack of resources to project economic power the way it once did. Because of tight budgets and competing financial demands, the United States is less able to maintain its economic power, and because of political infighting, it has been unable to formally share it either. Experts say that is giving rise to a more chaotic global shift, especially toward China, which even Obama administration officials worry is extending its economic influence in Asia and elsewhere without following the higher standards for environmental protection, worker rights and business transparency that have become the norms among Western institutions. President Obama, while trying to hold the stage, clearly recognizes the challenge. Pitching his efforts to secure a major trade accord with 11 other Pacific nations, he told reporters on Friday: “The fastest-growing markets, the most populous markers, are going to be in Asia, and if we do not help to shape the rules so that our businesses and our workers can compete in those markets, then China will set up the rules that advantage Chinese workers and Chinese businesses.” In an interview on Friday, Mr. Lew, while conceding the growing unease, hotly contested the notion of any diminution of the American position. “There is always a lot of noise in Washington; I’m not going to pretend this is an exception,” he said. “But the United States’ voice is heard quite clearly in gatherings like this.” Nonetheless, the challenges keep mounting. An overhaul of the I.M.F.’s governance structure, negotiated five years ago in large part by President Obama to give China and other emerging powers more authority commensurate with their growing economic strength, has languished in Congress. That, in part, propelled China to create its own multilateral lending institution in direct competition with the behemoths in Washington. The efforts to secure an ambitious 12-nation Pacific trade agreement, championed by Mr. Obama and recently backed by a handful of key lawmakers, has set off perhaps the biggest fight of his presidency within his own party, with trade unions, environmentalists and liberal activists lining up in opposition to the White House. There is a strong possibility that Mr. Obama could lose the battle. Even the United States’ Export-Import Bank, a lending agency similar to export financing arms in countries around the world, could be killed in June by conservatives in Congress, leaving would-be foreign customers in the cold and many American exporters at a disadvantage to competitors abroad. “I’ve been searching for a word to describe it, and the one I use is ‘withdrawal,’ best I can come up with,” said Edwin M. Truman, a former Obama Treasury official now with the Peterson Institute for International Economics. “We’re withdrawing from the central place we held on the international stage.” In Washington, that concern crosses party lines. “This is really about a crossroads for America and its leadership for the world,” said Representative Dave G. Reichert, Republican of Washington. “We set the tone, we set the path for the global economy by being leaders. And if we don’t, other countries step in.” The costs could be real. Failure to bolster the I.M.F. and other institutions weakens the West’s hand in confrontations like the one with Russia over Ukraine, which has begged for multilateral economic assistance. Senator Lindsey Graham, Republican of South Carolina, pointed to conflicts like the one in Syria, suggesting that fears the I.M.F. and World Bank will be unable to help rebuild the shattered country only opens the door to confrontational actors like Iran. “Sometimes we can only hope it’s China that steps in,” he said. But China’s rising sway in Africa, South Asia, and even Latin America could blunt efforts by the United States and its allies on a range of issues, from stemming violent extremism to slowing climate change. For much of Washington and the world’s economic leaders, China’s creation of the Asian Infrastructure Investment Bank crystallized the choice policy makers face. Earlier this month, Lawrence Summers, who was a top economic adviser for both President Bill Clinton and Mr. Obama, declared that China’s establishment of a new economic institution and Washington’s failure to keep its allies from joining it signaled “the moment the United States lost its role as the underwriter of the global economic system.” For years, China had threatened to establish institutions to rival those dominated by the West, like the I.M.F., World Bank and Asian Development Bank — or even to establish its currency, the renminbi, as a reserve currency to rival the dollar. In 2010, Mr. Obama brokered a deal to raise China’s stake in the I.M.F. to 6 percent from 3.8 percent, still far below the United States’ vetoing share of 16.5 percent but enough to give Beijing a larger say. Congress has blocked the proposed adjustment. Meantime, China’s international lending has soared. Fred P. Hochberg, who heads the Export-Import Bank, said that in the last two years alone, Chinese state-run lenders have lent $670 billion. Ex-Im has lent $590 billion since it was created during the Depression of the 1930s. With nearly $4 trillion in foreign exchange reserves, China has plenty of resources to project its rising economic power. For example, China’s president, Xi Jinping, plans to offer $46 billion to Pakistan for infrastructure assistance that would open new transportation routes across Asia and challenge the United States as the dominant power in the region. “The United States has lost its way and is rapidly forfeiting claims to global financial, economic, political and moral leadership,” Kevin Rafferty, a former World Bank official, wrote recently in two leading English-language newspapers in Asia. He blamed the White House: “Not for the first time, Obama has shown he can talk eloquently, but does not have a political clue how to get things done.” Other experts and historians, however, say too much can be made of the moment. Walter Russell Mead, a professor of foreign affairs at Bard College, noted that the rise of China as an economic force was inevitable, and that its establishment of a rival lending institution was far different from the international behavior of the Soviet Union and communist Chinese during the Cold War. Then, he said, America’s rivals were trying to destroy and replace the economic order established by the United States and Britain after World War II. Now, emerging powers are emulating it, however imperfectly. Whatever the ultimate consequences, there is plenty of finger-pointing going on. Senator Bob Corker of Tennessee, chairman of the Foreign Relations Committee and a potential ally on international economics, echoed Mr. Rafferty. In an interview, he said he included the I.M.F. quota adjustment in an aid package last year to beleaguered Ukraine, but Mr. Obama, he insisted, did not personally intervene to push it through. He fretted that new legislation granting the president “fast track” trade-promotion authority to complete major trade deals with Asia and Europe would stall without enough White House attention. “I was in Southeast Asia in August, and the countries there know there’s no real capital being expended, and they’re worried,” Mr. Corker said, his voice rising in frustration. “They just cannot pull themselves together to push for something.” Administration officials disputed the charge. “I can tell you I have spent dozens if not hundreds of hours talking to central bankers and finance ministers,” Mr. Lew said. “They understand we are sparing no expense.” The leader of the opposition both to the I.M.F. reforms and the Export-Import Bank has been Representative Jeb Hensarling of Texas, the chairman of the House Financial Services Committee, backed by the Tea Party wing of the Republican Party. The opposition to international trade alliances, on the other hand, is being led loudly by Democrats who had previously been the president’s most stalwart backers, with an assist from ardent conservatives who oppose anything Mr. Obama does. Senator Tim Kaine, Democrat of Virginia and an emerging internationalist advocate, suggested that two decades of war were turning elements of both parties inward. “The network of international rules and institutions is a peculiarly U.S. creation” that has helped foster peace and prosperity for decades, he said. “The U.S. has built this up, not only for our own benefit but for the world. That we are now stepping back from a leadership role is highly, highly problematic.”

World Bank
China
Asian Infrastructure Investment Bank
International trade
US Foreign Policy
IMF
US Economy
Export-Import Bank of US
Barack Obama
Trans-Pacific Partnership


Bloomberg Takes School Plan, and His Style, to Midwest

Abstract: ST. LOUIS, July 25 — What does the Midwestern voter think of Mayor Michael R. Bloomberg ? Perry Hines, for one, raised an arched brow. “What is it? Is he a Democrat? Is he a Republican? Now he’s independent,” said Mr. Hines, 45, a retired marketing executive who heads the Indianapolis chapter of the National Urban League. “Outside of both coasts and outside the Beltway, that lack of conviction breeds suspicion.” Mr. Hines was standing in a ballroom of the Renaissance Grand Hotel here on Wednesday, waiting for the mayor to speak at a lunch for regional Urban League leaders. The black leadership group’s annual conference, which began Wednesday, has become a required stop for presidential aspirants, at least six of whom plan to drop by this time. But Mr. Hines said he was skeptical of the prospects of a politician who had not officially joined the current group of contenders. “Some people call it pragmatic; I call it opportunistic,” he said of the mayor’s party switches. “The question for any voter — a Midwesterner who’s not a New Yorker — will be, ‘Well, what is he?’ ” Mr. Bloomberg attempted an answer of sorts in a half-hour speech that urged national leaders to follow the methods he used to improve New York City’s public schools, like increasing teacher salaries, issuing grades for schools and instituting a corporate-style system of accountability. “The federal government should commit to a significant increase in new federal funding, including for higher teacher salaries, but cities and states could only receive it if they began implementing the reforms I’ve outlined today,” the mayor said as more than 200 regional Urban League leaders dined on roast pork, salad and iced tea. The mayor pitched the plan as a crucial step in alleviating racial inequality. “We can stop talking about closing the achievement gap between races and actually have them catch up,” the mayor said. “We can stop talking about the equal opportunity of the civil rights movement and actually make it a reality.” The speech was, by many accounts, a hit. Mr. Bloomberg closed with a charge — “Let’s get to work” — and stepped offstage to a standing ovation as well-wishers lined up by his chair. Christopher Washington, 41, a university administrator who directs the Urban League affiliate in Columbus, Ohio, said afterward that he agreed with the mayor’s message. “We need to pay more for good teachers,” he said, adding that increasing incentives for teachers to improve performance “makes sense, and it goes against conventional wisdom.” At a press conference afterward, Mr. Bloomberg again denied any presidential ambitions. “I am going to be the mayor of the city of New York, God willing, for the next two and a half years,” he said. But asked what advice he would offer Police Commissioner Raymond W. Kelly, who recently hedged on running for mayor, Mr. Bloomberg gave a provocative response: “You never want to go through life saying I could have. I could have been a contender.” A Quinnipiac University poll released on Wednesday showed that 73 percent of New Yorkers approve of Mr. Bloomberg’s work as mayor, with only 19 percent disapproving. More than half believe he is likely to seek the presidency; 34 percent said they would “definitely” or “probably” vote for him. “He crosses all racial and ethnic lines,” said Maurice Carroll, who directs the poll. “It took New York a little while to get used to him. But they’re used to him now, and they think the rest of the nation could get used to him.” And Mr. Bloomberg’s Midwestern cameo appearance may have won him at least one convert. Mr. Hines, the skeptic from Indianapolis, said after the speech: “I was very impressed. He hit a lot of the right notes.”

Urban League
Presidential Election of 2008
Bloomberg Michael R


John Scott, an Unlikely N.H.L. All-Star, Becomes the Game’s Equally Unlikely M.V.P.

Abstract: NASHVILLE — Fans sent John Scott to the N.H.L. All-Star Game by voting him captain of the Pacific Division. Then they made him tournament most valuable player. Scott scored twice during the league’s new three-on-three All-Star tournament, bringing cheers from fans and smiles from teammates, and was named M.V.P. as a write-in candidate after leading the Pacific to a 1-0 win in the championship on Sunday night. Scott, a 6-foot-8 forward with five goals in 285 career N.H.L. games, was not listed among the three M.V.P. candidates for a Twitter vote late in the final game, but fans took it upon themselves to select him again. “I’m sure he won over a lot of people and got even more fans,” Chicago forward Patrick Kane said of Scott. Fans at Bridgestone Arena booed the M.V.P. options and yelled for Scott. Teammates lifted him on their shoulders while fans chanted “M.V.P.!” Then Scott was announced as the winner and presented with a sport utility vehicle. Scott then posed with his teammates behind their $1 million check. “I think it’s the best possible outcome, right?” Scott said. “We had a good weekend.” He added, “We left winning, so it was great.” The N.H.L. changed the format after last year’s All-Star Game featured 92 shots and a combined 29 goals for the biggest offensive display in the showcase’s 60-year history. This year, the All-Stars combined for 116 shots and 23 goals. Sunday’s event looked much more like the hockey the league plays the rest of the season. The inspiration was the three-on-three overtime approach for a tournament pitting the four divisions against one another in 20-minute games. The winners of the first two games advanced to a third-period championship. “I broke a better sweat than last year for sure,” said Philadelphia Flyers forward Claude Giroux, who played for the Metropolitan Division. Goalies split the work with a 10-minute portion each and actually got the chance to stop shots rather than be targets in the net. The Panthers’ Roberto Luongo and the Kings’ Jonathan Quick each made great saves to keep the first 10 minutes of the championship game scoreless, and Quick stopped Florida forward Jaromir Jagr in the final seconds before intermission. Scott, the personable career enforcer who is now a minor leaguer, stole the show. A fan campaign made Scott captain of the Pacific Division before the Arizona Coyotes traded him Jan. 15 to Montreal, which assigned him to the American Hockey League. Scott will return to Newfoundland in Canada with a lot of prizes after fans took it upon themselves to vote him over the three finalists offered by the league’s hockey operations: Luongo; Calgary forward Johnny Gaudreau; and Edmonton forward Taylor Hall. Anaheim forward Corey Perry scored the lone goal in the championship at 13 minutes 38 seconds. Pittsburgh defenseman Kris Letang blocked a shot, and Montreal defenseman P. K. Subban sprawled out on the ice to help protect a lead in the final seconds of the Atlantic Division’s 4-3 win over the Metropolitan. Tampa Bay goalie Ben Bishop stopped shots by Letang and his Penguins teammate Evgeni Malkin inside the final minute to preserve the win. Goalies also got into the offensive action, taking advantage of more room on the ice. Corey Schneider of the Devils, Nashville’s Pekka Rinne, Bishop and Anaheim’s John Gibson each had assists. Jagr, the captain of the Atlantic Division, who turns 44 on Feb. 15, skated in his 10th All-Star Game. He became the third-oldest player to take part in the event, behind Gordie Howe (51 in 1980) and Doug Harvey (44 in 1969). Shea Weber, the Predators’ captain; Luongo; and Kane each made their fifth career appearances. Jagr scored his fifth career goal in this event to help the Atlantic beat the Metropolitan. The Pacific beat the powerful Central, 9-6, to advance.


Skype I.P.O. Could Help Out Silicon Valley

Abstract: Skype’s initial public offering may add a dose of healthy hype to Silicon Valley. The Internet telephone group’s $100 million float should be red hot. While there have been several tech offerings this year, investor reception has been uneven. A bit of justified excitement over Skype’s growth and its backers’ gains is just what the Valley’s capitalists — and entrepreneurs — need. With hot companies like Facebook and Zynga ruling out public floats in the near future, growth investors are hungry for the next big ticket. Skype obliges. It has 560 million registered users and continues to grow. It added 86 million in the first six months of the year. Moreover, it is in the black. Skype has $116 million of adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) since January, and this figure could grow rapidly if the company succeeds in cracking the lucrative business market. Moreover, Skype is big. If its estimated 2011 revenue of $1 billion is valued on the same multiple as Google, the company might be worth more than $5 billion. That would be a huge gain for the private equity backers at Silver Lake who led Skype’s carve-out from eBay, clarified copyright issues with its founders and tweaked its software. They valued it at $2.75 billion at purchase in 2009. Valuing Skype in line with Google may sound optimistic. But there’s the issue of scarcity — the $100 million sale of stock is minuscule. This could set off a scramble for the available shares, sending them rocketing. The Valley needs a bit of this sort of ebullience. Venture capitalists are sitting on a huge backlog of companies that could go public, which is one reason the average fund established since 1998 hasn’t made any profits for investors. Sure, there have been 11 tech I.P.O.’s this year and more in the pipeline, like Demand Media. But the average I.P.O. is up less than 2.5 percent, according to Thomson Reuters data. That’s not much to write home about, and certainly not a big draw for sellers or buyers. A successful Skype offer would be a different story. Investors would presumably clamor for more of the same, increasing valuations on tech firms that earn money on social applications. If there’s enough appetite, it could even tempt companies like Facebook, Zynga and Yelp to consider selling shares to the public. Skype deserves some hype. Peak Oil’s Prophet Peak Oil has lost its leading prophet with the death of Matt Simmons on Sunday. Since many nations refuse to share intimate oil data, it may be years before his warnings of ebbing production are vindicated — or discredited. But his crusade for more data on supplies is as urgent as ever. A highly successful banker and the patriarch of Simmons & Company International, Mr. Simmons added plenty of gravitas to the “peak oil” movement, which contains more than its share of nuts. His 2005 book, “Twilight in the Desert,” took on the biggest oil producer of all, Saudi Arabia. Drawing on 200 technical papers, he concluded that the kingdom’s largest oil field, Ghawar, would soon run out of oil. As a result, oil’s friendly giant would soon start to struggle to keep up with rising global oil demand. Unlike M. King Hubbert, the founding father of the peak oil theory, Mr. Simmons was a financier and not a geologist. Thus his scientific grasp was sometimes questioned. Saudi Aramco’s former head of reservoir management, Nansen Saleri, quipped that he could read 200 studies on neurology and nobody would want him to operate on their brain. Recent developments have cast doubt on the notion that geology will be the immediate problem. Advances in deep sea drilling have brought huge reservoirs within reach off the coasts of West Africa, Brazil and the Gulf of Mexico. As prices have risen, Canada’s trove of oil sands becomes economical to extract. And, politics permitting, huge reserves of cheap oil may be drilled in Iraq. This does not invalidate Mr. Simmons’s arguments. With the fate of the global economy hinging on a reliable energy supply, it is dangerous to blindly trust big oil producers’ own estimates of their reserves. Any transition away from oil, after all, would need to be planned for decades in advance. Mr. Simmons’ quest for more information should not die with him. ROBERT CYRAN and CHRISTOPHER SWANN

Initial Public Offerings
Skype Technologies
Internet Telephony
Oil (Petroleum) and Gasoline


Corzine Returns to Hospital With Thanks, and a Grant

Abstract: CAMDEN, N.J., July 16 — This time, Gov. Jon S. Corzine joked, he was thankful that he showed up in a car, and not in a trauma helicopter. Returning on Monday to Cooper University Hospital, where he spent three weeks in April after being critically injured in a car crash, Mr. Corzine did two things: First, he thanked the medical team that had saved his life, and second, he announced that the state would provide $6.4 million toward a $100 million cancer center that hospital officials hope will break ground next year. “I’m emotionally connected to the Cooper system,” Mr. Corzine said. The governor suffered more than a dozen broken bones and lost half his blood when his state car, being driven at 91 miles per hour, crashed on the Garden State Parkway a few miles north of the Atlantic City Expressway. Mr. Corzine, who was not wearing a seat belt, was then flown by helicopter to Cooper, the nearest major trauma center. Mr. Corzine had several operations and spent more than a week on a ventilator. Since then, the pace of his recovery has stunned his doctors, including Dr. Steven E. Ross, head of the hospital’s trauma division, whom Mr. Corzine singled out on Monday as a “miracle maker.” Still, Mr. Corzine must undergo three to four hours a day of rigorous physical therapy , and said on Monday, “We’ve still got some ways to go.” He has even told some friends that his left thigh bone, which was fractured in the accident, may require additional surgery. Mr. Corzine has returned to Camden a few times to visit his doctors and therapists since he was discharged on April 30. But on Monday he did so in the most public fashion, announcing the $6.4 million in state financing at a catered event before hundreds of hospital employees and local officials, all huddled under a white tent. Given the extra scrutiny surrounding Trenton’s budgetary habits in recent years, it was only natural that reporters asked Mr. Corzine whether his stay at Cooper had motivated him to approve the grant, especially since the item was not in his original proposed budget in February. But Mr. Corzine said that he had long viewed the hospital as critical to the revitalization of Camden, one of the state’s poorest and most dangerous cities. The cancer center is part of an ambitious $500 million expansion under way at the hospital. “I’d been at Cooper hospital and working on Camden issues before the accident,” Mr. Corzine said.

Hospitals
Cancer
New Jersey
Corzine Jon S


Spirit Airlines Banks on Few Frills, and More Fees

Abstract: There is a joke in the airline business that you could make money giving out free beer and charging a fee for the bathroom. No one has tried that — at least not yet — but one small airline has led the way in the United States when it comes to passenger fees: Spirit Airlines, the no-frills carrier that prides itself for offering the lowest fares, then charging passengers for everything else. Need an agent to print out a boarding pass at the airport? That’s $10. Want some water? That’s $3. Rolling a bag on board? The tag costs $35 from home and $50 at the airport. In all, there are about 70 fees enumerated in dizzying detail on Spirit’s Web site for customers to navigate. To the millions of travelers flying on vacation this summer, the fees can be infuriating, but Spirit makes no apologies. In an age of consolidation in the airline industry, Spirit, with about 1 percent of the nation’s passenger traffic, has managed to succeed by going it alone, scraping for every dollar and scrimping on every cost. “Spirit does everything it can to make or save a buck,” said Henry Harteveldt, a travel analyst with Hudson Crossing. “To its credit, Spirit doesn’t promise passengers that they’ll be coddled. Its customer service standards are terrible, and the airline’s actions have shown it doesn’t care about being liked or respected.” The driving force behind that strategy is Spirit’s chief executive, Ben Baldanza, 51, an industry veteran who arrived at Spirit eight years ago with no experience at a no-frills airline. Along with an obsessive attention to keeping costs low, Mr. Baldanza argues that the cornucopia of fees allows the airline to keep its fares lower than rivals. The airline, known for its tasteless ads (during the presidential election, one ad talked of Spirit having “binders full of sales. Women will love them!”) is modeled after Ryanair, which charges low fares for flights throughout Europe with a minimalist approach to customer service. “I cringe a little when people say I don’t care about customers,” said Mr. Baldanza, who brims with missionary zeal. “We care about the thing that customers tell us they care the most about, and that’s offering the lowest possible fares. The customers who fly Spirit absolutely understand the trade-off.” On a recent day at La Guardia Airport, passengers seemed to be taking the fees in stride. Two students forgot about the fee that Spirit charges for carry-on bags. That did little to reduce their enthusiasm to fly to Las Vegas despite the early loss. Kevin Reed, a photographer flying to Myrtle Beach, S.C., paid an extra $10 on top of a $35 checked-bag fee because he failed to do so when he bought his ticket. “They got me there,” he said, shrugging. “But I’m still saving $400 over flying with Delta.” Not every customer has the same reaction, though. Spirit is routinely rated as the nation’s worst airline because some travelers deem the fees unfair. The Transportation Department receives far more complaints about Spirit than other carriers, with 6 to 8 complaints per 100,000 passengers compared with the industry average of 1.4. And Spirit’s on-time record is similarly abysmal, at 68.8 percent compared with 80 percent for the industry average. The best airlines are in the mid-90s. Critics point out that the inflation of air travel fees makes it increasingly difficult to compare the cost of travel between airlines. “The fee-for-everything technique allows airfares to be advertised as much lower than the overall cost,” said Paul Hudson, the president of FlyersRights.org, a consumer group. Mr. Baldanza acknowledged that the process can be tricky. “You can’t sleepwalk through the process,” he said. But the model has allowed Spirit to offer cheap tickets. Since 2008, Spirit’s airfare has dropped by 20 percent, averaging $75 in 2012 compared with $94 in 2008. The difference often jumps out at a customer searching for flights. On Friday, Spirit was offering a nonstop flight from Oakland, Calif., to Portland, Ore., in mid-July for $156; the same trip was $296 on Delta. Because of its growing list of fees, however, nonticket revenues grew to $51.39 in 2012, from $18.61 in 2008. As a result, while fares fell, Spirit’s total revenue per passenger grew by 12 percent from 2008 to 2012, reaching $126.50. Fees now account for 41 percent of Spirit’s revenues, an industry record. Image Workers unloading passenger baggage from a Spirit Airlines jet at Fort Lauderdale-Hollywood International Airport in Florida. Credit Moris Moreno for The New York Times The trade-offs are obvious. Spirit has no business class, offers no movies and no Wi-Fi, and its seats don’t recline, legroom is the tightest in the business. But a nonstop flight from Dallas to Orlando costs $366 on Spirit and $499 on American Airlines. Still, Spirit is not about to take over the domestic industry. The carrier, which caters to leisure travelers and not the business flier, has only 49 planes, compared with more than 600 for Southwest. But it is growing about 20 percent a year when most of the industry is contracting or staying flat. It plans to add four more planes this year and another 17 over the next two years. The airline, based in Miramar, Fla., flies about 50 routes, mostly on the East Coast, Florida, Central America and the Caribbean. It started flying as a charter airline in 1980, but adopted a low-cost model in 2007, when new investors charted a different course for the unprofitable airline. Last year, Spirit had its fourth consecutive year of profitability, and generated some of the best returns in the industry, along with a record return on invested capital of 26.5 percent. Investors have responded. Since the company’s initial public offering two years ago, shares have more than doubled. They traded at $30.43 on Friday, valuing Spirit at $2.21 billion. Mr. Baldanza said he is not done and wants to grow the fleet to 150 planes within five years and account for about 3 percent or 4 percent of traffic. He likens his airline to Southwest in the mid-1980s, when the low-cost airline was the industry’s maverick. Like Southwest before it, Spirit achieves significant savings from its bare-bones operations. This explains why the airline charges for water on board, since carrying bottles has a cost that Mr. Baldanza refuses to pay. “If you can do it yourself, it’s free,” he said. “If we have to do it, you’ll pay for it.” Another way Spirit cuts costs is by packing more passengers on its plane, which all have 178 seats, while similar models on US Airways and JetBlue have 150. This allows Spirit to spread its costs. Its planes also fly longer each day — nearly 13 hours, allowing for more flights. Southwest, by contrast, flies its planes about 10.4 hours a day. At La Guardia, Spirit operates 12 flights every day out of a single gate. Passengers are not given many scheduling options either. “We schedule our flights when the gate is available as opposed to when the customers want to fly,” Mr. Baldanza said. “It doesn’t matter that no one wants to fly at 9 a.m. or 2 p.m. or in the middle of the night. The reality is that they want to fly when they get the low fare.” Spirit also makes sure its flights are always full and sets its prices accordingly. (There’s a joke inside the airline that empty seats don’t check bags, Mr. Baldanza said.) As a result, it costs Spirit just 10.15 cents to fly one passenger for one mile, compared with United’s 18.25 cents and Southwest’s 11.08 cents. Spirit was the first airline to charge for checked bags, in 2007, a move others eventually followed. Last year, airlines collected $6 billion just from checked bag fees and reservation changes, up from $1.4 billion in 2007, according to the Department of Transportation. Spirit was also the first airline to charge passengers for their carry-on bags, but that’s still a red line few have dared to cross except for Allegiant Airlines and Frontier. The big question is whether travelers will eventually push back on fees. “People don’t like the extra fees, they don’t read the fine print and they get mad,” said Ann Sheaffer, an accountant checking in for a Spirit flight to Dallas/Fort Worth International Airport. “But it’s all there in black and white. You just have to read it and understand it.”

Spirit Airlines
Customer service
Ben Baldanza
Price
Airlines,airplanes


Citigroup to Acquire Rest of Japan's Nikko Cordial

Abstract: TOKYO, Oct. 2 (Reuters) — Citigroup said Tuesday that it would buy out minority shareholders in the Japanese brokerage firm Nikko Cordial for $4.6 billion. Citigroup spent about $8 billion this year to buy a 68 percent stake in Nikko Cordial, one of Japan’s largest securities firms, in its biggest Asian acquisition ever. Since then, the bank has been increasing its presence in Japan and looking to repair its image, which was damaged three years ago when it fell afoul of Tokyo regulators. Citigroup, the largest American bank by market value, said it would offer its own shares to buy the 32 percent of Nikko it does not own. The deal may be the first use of a new law in Japan that allows a foreign firm to use its own shares as currency when buying a Japanese company. Citigroup is one of several foreign financial firms looking to court millions of wealthy individuals in Japan and the country’s estimated $13 trillion in household financial assets. The bank has been expanding its Japanese retail branch network and making efforts to buff its image, tarnished when regulators shut its private banking operation in 2004. Owning Nikko Cordial gives Citigroup full control of more than 100 brokerage outlets and a name well known to domestic investors. Citigroup started its buyout bid this year after Nikko was rocked by an accounting scandal that hurt business at its core retail unit, Nikko Cordial Securities, and its investment banking joint venture, Nikko Citigroup Ltd. Citigroup said that for each of their shares, Nikko minority shareholders would receive Citigroup shares with an expected value of 1,700 yen, a 16 percent premium to Tuesday’s closing price of 1,462 yen and the same price Citigroup paid in a tender offer this year. That would value the 32 percent stake at about 530 billion yen ($4.6 billion).

Japan
Nikko Cordial Corp
Citigroup Incorporated
Brokers and Brokerage Firms


Adrian Peterson’s Charge Is Dismissed

Abstract: A grand jury in Houston dismissed a misdemeanor resisting-arrest charge against Minnesota Vikings running back Adrian Peterson. Peterson was arrested in July outside a nightclub, was handcuffed and was briefly jailed after a confrontation with an off-duty police officer. Peterson said in court a week after the incident that he “didn’t push, shove, touch anything to anyone that night, especially an officer.” The case is expected to be formally dropped Wednesday, Peterson’s lawyer said.

Minnesota Vikings
Football
Peterson Adrian


Trying to Force the S.E.C.’s Hand on High-Speed Trading

Abstract: Robert P. Bartlett III is a law professor at the University of California, Berkeley, School of Law and faculty co-director of the Berkeley Center for Law, Business and the Economy. Justin McCrary is a law professor at the University of California, Berkeley, School of Law and the director of the Berkeley Social Science Data Laboratory. Brad Katsuyama, the hero of “ Flash Boys,” has thrown down the gauntlet. “Flash Boys, ” of course, is Michael Lewis’s best-selling book that documents how today’s capital markets are “rigged” in favor of high-frequency trading firms. In the book, Mr. Katsuyama fights back by forming the Investors Exchange, or IEX —a “we’re not gonna take it anymore” dark pool where investors can trade without high-frequency trading firms preying on their orders. Like all dark pools, IEX operates as an alternative trading system. In September, Mr. Katsuyama filed an application with the Securities and Exchange Commission to make IEX an official stock exchange. The comment period recently closed, so an action by the agency is expected soon. Although the S.E.C. originally set a deadline of Dec. 21 to act on the application, it recently asked for another 90 days to make a decision. Why the delay? One reason may be that for the S.E.C. to make a determination, it may first have to take a stand on a form of high-frequency trading known as latency arbitrage, which is a strategy whereby traders use high-speed data feeds from exchanges to profit off investors who use slower feeds. To date, the agency has avoided taking a position on this form of trading, but IEX’s application may finally force it to do so . To understand why, let’s review how IEX allows investors to shield themselves from it. Imagine you’re a trader looking to sell 100,000 shares of XYZ, and the national best bid and offer across all exchanges stands at $10.00 and $10.01. To get the best price, you might try posting a limit order on an exchange at the national best offer of $10.01 and wait for a market “buy” order to fill it. But success is uncertain: A market order may never arrive, and even if one does, exchanges observe price-time priority. So you may be so far back in line that your order sits unfilled. As a second-best option, you may consider using a dark pool. These non-exchange platforms allow traders to submit orders that are “pegged” to the midpoint of the national best bid and offer, or here $10.005. So rather than wait in line to sell at $10.01, you can submit a midpoint sell order to a dark pool hoping to find a buy order. This, too, is uncertain, but the fact that you’re selling at $10.005 (rather than $10.01 offered on exchanges) should entice buyers to check dark pools for midpoint liquidity. And in fact, we find that investors using dark midpoint orders are a major reason that non-exchange trading constitutes one-third of all trading volume. The problem, however, is that midpoint orders expose you to latency arbitrage. When a dark pool calculates the price for your order, it obviously needs to obtain the national best bid and offer. Many dark pools turn to a central processor called the Securities Information Processor, to which all exchanges are required to send changes to their best bids and offers. Exchanges, however, are also allowed to sell their data directly to subscribers. Although the S.E.C. requires that exchanges release data to subscribers and the Securities Information Processor at the same time, there’s no requirement on when that data is received . Exchanges, recognizing the market for faster access to data, accordingly offer a variety of services that reduce the transit time —or latency — of their market data. Nasdaq, for instance, conveniently offers the ability to co-locate a server next to its matching engine while receiving data feeds from other exchanges via its “ Metro Millimeter Wave ” connections. It’s one-stop shopping for the aspiring high-speed trader. As a result, when your dark pool “pegs” your order to the national best bid and offer, it will almost certainly be slower to see a change than a speedy trader using exchanges’ direct data feeds. So if the national best bid and offer moves to $10.01 and $10.02 after you submit your order, a speedy trader will (1) see this before your dark pool, (2) buy your shares at the stale midpoint of $10.005, and (3) sell them at the national best bid of $10.01. Voilà! Your midpoint order gives our speedy trader a free option to buy at $10.005. IEX’s secret sauce is a “speed bump” that prevents this arbitrage from occurring. By separating its access point and its matching engine by 36 miles of coiled fiber optic cable, IEX forces every order to experience a 350-microsecond delay from the time it is submitted to the time it is executed. IEX does this because 350 microseconds is just enough time for it to see an update to the national best bid and offer and re-price a pegged order. For investors trading on IEX, this means submitting a midpoint peg order will not be subject to latency arbitrage; the delay makes it too hard to hit a stale midpoint order before IEX updates its price. Now that IEX is seeking to become an exchange, the main dust up is whether the speed bump is consistent with rules governing stock exchanges. Like all exchanges, IEX wants trading centers to route marketable orders to it when its quotations are at the national best bid and offer. But quotations on exchanges must be “immediately” accessible to receive this benefit, and the speed bump is obviously intended to introduce a delay in accessing IEX quotations. In opposing the application, incumbent exchanges have focused on this seemingly clear conflict between the rule and IEX’s structure, but it is not clear the strategy has worked. Instead, IEX has used it to highlight how lots of exchanges coil their fiber to create access delays. The difference is that, although IEX does it to provide equal access to its platform, other exchanges do it to assure co-location subscribers that they all receive the same level of latency — a response that makes their focus on the speed bump awkward, to say the least. All of which brings us back to the S.E.C. A recurring theme in the IEX application is that the quiet revolt by investors outlined in “Flash Boys” has now become a full-fledged movement for a referendum on our speed-based market structure. This framing undoubtedly puts the market regulator in an uncomfortable position, particularly because the agency only recently commenced a study of latency arbitrage. Can the S.E.C. risk approving the application — and its explicit position that latency arbitrage is “pernicious” — without a formal cost benefit analysis of the issue? Given IEX’s success in drawing investors to its dark pool, can the market regulator risk rejecting it without endorsing an exchange structure that facilitates latency arbitrage? And if the S.E.C. approves the application, does this mean it’s time to consider moving to frequent batch auctions ? Whatever one makes of the merits of IEX’s application, it is difficult not to see the episode as a clear example of the growing divide between the speed with which our market microstructure evolves and the ossified process by which it is regulated. Media attention to latency arbitrage might be novel, but the issue is hardly a new one; investors have voiced concerns about exchanges’ preferential distribution of market data since at least 1975. In light of the S.E.C.’s unwillingness to take any action, IEX and its backers simply took matters into their own hands. Of course, one could view this as exactly how private ordering is supposed to work. But given the complexity of our market structure regulations, the distinction between efficient private ordering and externalizing the cost of inefficient regulations on others is hardly clear. After all, couldn’t co-location also be said to be a product of private ordering? Concerns about how the speed bump will affect trading at other exchanges make the distinction similarly blurred for IEX’s application. In light of this uncertainty, regulation by application is an ill-advised technique for regulating a market. Whatever comes of the IEX application, we hope that the experience encourages the S.E.C. to be more responsive to issues that are known to concern market participants.

Brad Katsuyama
Regulation and Deregulation
High Frequency Trading Flash Orders
SEC
IEX Group


Mercury Is Shrinking, a ‘Great Valley’ Shows

Abstract: A colossal canyon on Mercury may provide evidence that the tiny planet is shrinking. Using data from NASA’s Messenger spacecraft, researchers have discovered a 620-mile-long, 250-mile-wide and 2-mile-deep valley on the planet’s southern hemisphere. It’s about the size of Montana and twice as deep as the Grand Canyon. In the elevation map above, the dark-blue chasm leads to a large purple crater known as the Rembrandt impact basin. The researchers believe the “great valley” formed as Mercury’s interior cooled, which caused the planet’s crust and upper mantle to contract and bend. The findings appeared Wednesday in the journal Geophysical Research Letters . Unlike Earth, which has multiple tectonic plates , Mercury’s lithosphere is made of a single plate. As it cooled, it buckled like a grape shriveling into a raisin. Researchers are still piecing together all of the clues about how Mercury, the closest planet to the sun, cooled. Some scientists think it may have also undergone a more recent warming period after it formed. Mercury might have shrunk by nearly nine miles in diameter in the past four billion years, according to previous research, and might still be getting smaller.

Planet
NASA
Messenger Spacecraft
Geophysical Research Letters
Mercury Planet
Space
Geology


U.A.W. Wants to Share in Big 3’s Financial Success

Abstract: DETROIT — As better times return, the United Automobile Workers is not the union it was before Detroit’s carmakers hemorrhaged billions of dollars. The union is now a part owner of General Motors and Chrysler through a union trust fund, and its members are barred from striking against the two companies over compensation for the next five years. All told, hourly workers gave up pay and benefits worth $7,000 to $30,000 each a year during the downturn, the union estimates. But while those changes might blur the traditional battle lines between management and union, the incoming president of the U.A.W., Bob King, is making it clear some things are not about to change. As one automaker, the Ford Motor Company, restores some perks for salaried workers, Mr. King is putting the companies on notice that he expects hourly workers to be given back some of the benefits they surrendered as the bottom lines of all three car companies improve — at least to the extent that management and other stakeholders are rewarded. The union is expected to ask that some of its givebacks be reversed during contract talks with the carmakers in 2011, when the contract signed in 2007 — and modified last year with more concessions as General Motors and Chrysler approached bankruptcy — expires. “When there’s equality of sacrifice, there’s got to be equality of gain,” Mr. King said during a speech to executives and analysts this week. “We just want to make sure when things turn around we share in the upside.” Mr. King’s muscle flexing is bound to be popular with his rank and file, but it comes at a delicate time. Some of the carmakers are just getting their footing back, and during much of the crisis, critics have portrayed his union as a major hindrance to Detroit’s ability to compete with foreign rivals. There is also the difficult task of navigating volatile public sentiments about the $62 billion in taxpayer money given to G.M. and Chrysler. “The bankruptcies were structured to protect the union interests at the expense of the creditors and investors,” said Paul Kersey, director of labor policy at the Mackinac Center for Public Policy, a conservative research group in Midland, Mich. “So I don’t see there being a whole lot of public support for them pursuing a restoration of the concessions.” That might be one reason that Mr. King, the nominee to succeed the retiring Ron Gettelfinger next month, is trying to frame the union’s position around the issue of equality. He said that while U.A.W. members had agreed to give up pay and benefits in recent years, the quality of the vehicles they built have improved amid many plant closings and uncertainty about their future. “They’re making it quite clear that they don’t want an upstairs-downstairs kind of industry where Champagne is poured in the boardrooms but the U.A.W. members are largely excluded from the festivities,” said Harley Shaiken, a professor at the University of California, Berkeley, who specializes in labor relations. The U.A.W. already is upset with Ford, which was the only one of the three big Detroit automakers to avoid bankruptcy. Ford remains publicly held and took no government loans. Ford has been profitable for four consecutive quarters, and this year has restored some compensation for salaried workers, including merit pay increases, tuition reimbursement and matching contributions to retirement accounts. Mr. King, currently a U.A.W. vice president in charge of the union’s work force at Ford, said the union has filed grievances on the matter, accusing Ford of violating its U.A.W. contract. “We had an understanding about equality of sacrifice,” Mr. King told reporters after his speech this week. “None of that, in my view of what the contract is, should have happened without our membership getting the same thing.” A Ford spokeswoman, Marcey Evans, said Wednesday that the company was honoring its contract and said any increases in pay or benefits for hourly workers would need to be negotiated. The cuts that affected salaried workers were made with “a commitment that the company would reinstate them as business conditions allowed,” she said. Ford did not issue merit-based raises in 2007 and 2009. Tuition reimbursement was suspended in 2008, and 401(k) matches were halted in 2009. Some benefits for salaried workers, including bonuses, have yet to be reinstated. Ford told workers the merit pay increases this year will average about 3 percent of their pay. Ms. Evans said that this year Ford gave profit-sharing checks averaging $450 to all of its union workers, in accordance with a formula dictated by the contract. The checks were based on Ford’s 2009 earnings of $2.7 billion. Workers would get larger checks next year if the company, which earned $2.09 billion in the first quarter, meets its profit forecast for 2010. Mr. King said that the two sides are close to resolving “one piece” of the grievances but that the issue could go to arbitration soon. Ms. Evans and Mr. King each said it was too early to discuss what either party planned to request during next year’s negotiations. “The economic situation at that time will have a huge impact,” Mr. King said. Another complicating factor is that the U.A.W. will enter the contract talks as part owners of both G.M. and Chrysler through a union-controlled trust fund. The fund, which took over liability for retiree health care coverage this year, has a 17.5 percent stake in G.M. and is the majority owner of Chrysler, holding 55 percent. “The U.A.W. has a powerful incentive to act responsibly,” Professor Shaiken said. “They want to see competitive companies, but competitive companies that they share in — not where the competitiveness comes at their expense.”

United Automobile Workers
Automobiles
King Bob
Organized Labor


Treasury to Examine Online Lending Industry

Abstract: The Treasury Department has begun a study of online marketplace lenders, as the federal government looks to determine whether regulations are keeping up with the rapidly growing industry. As many traditional banks have retreated from making small loans to businesses and consumers, a flood of online lenders have filled the void. Flush with investments from hedge funds and other institutions, the marketplace lenders say they are providing valuable credit to important, underserved segments of the economy, often with less trouble and at a lower cost. The Treasury Department said in a statement on Thursday that it was seeking “to study the potential for online marketplace lending to expand access to credit and how the financial regulatory framework should evolve to support the safe growth of the industry.” For now, the Treasury’s effort appears more of a fact-finding exercise, rather than a deliberate attempt to establish new regulations. The department is inviting public comment on the sector and plans to hold a round-table discussion this summer with input from the $12 billion industry, borrowers and consumer advocates. Marketplace lending began as a peer-to-peer model, where individuals could lend money through website to other individuals or small business. Today, much of the investments come from large investors that are funneling hundreds of millions of dollars to the marketplace lenders. Some of the more established companies, like Lending Club and Prosper Marketplace, have been vastly increasing their volume in recent years, while facing an ever-expanding field of upstart competitors. Even Goldman Sachs is starting an online consumer lending operation that mimics some of the marketplace approach. Without the overhead costs of large banks, the online lenders say they can charge lower interest rates and swiftly make a decision on whether to extend credit. Most marketplace lenders only facilitate the loans, which are held by investors. “While still a small component of the total consumer and small business lending market, it is a rapidly developing and fast-growing sector that is changing the way consumers and small businesses secure credit,” Antonio Weiss, a senior Treasury official, wrote in a blog post on the agency’s website. Still, despite the largely supportive tone of the Treasury’s statements, the department is also raising some pointed questions about the loosely regulated industry. In its request for information released Thursday, the Treasury said its questions included how borrowers are assessed for creditworthiness and whether lenders should be required to have “skin in the game,” meaning they retain some of the risk in case of default.

Treasury Department
Debt
Banking and Finance
Computers and the Internet
Tech Industry
Regulation and Deregulation