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Thursday, June 12, 2008

Local News | Oregon Court of Appeals protects medical marijuana | Seattle Times Newspaper

PORTLAND — The Oregon Court of Appeals has ruled that an employer must make a reasonable accommodation for medical marijuana use for a disability.

In an opinion issued Wednesday, the appeals court upheld a ruling by the state Bureau of Labor and Industries.

The agency said that Emerald Steel Fabricators in Eugene violated state laws barring discrimination against the disabled by discharging an employee who used medical marijuana.

A key issue was the fact the employee never used marijuana in the workplace — an issue the Oregon Supreme Court avoided in 2006 when it ruled against a registered medical marijuana user fired from his job at a Columbia Forest Products plant after urine tests detected traces of the drug.

Employers do not have to let patients smoke medical marijuana in the workplace. But the Oregon Medical Marijuana Act approved by voters in 1998 was unclear about whether employers must accommodate workers who smoke medical marijuana off the job.

In the opinion by Judge Timothy Sercombe, the Oregon Court of Appeals went back over the 2006 Oregon Supreme Court ruling to emphasize the Emerald Steel employee never used the marijuana at work — just like the worker in the Columbia Forest case.

The appeals court also noted the Oregon Supreme Court did not address some of the defenses raised in the earlier case, including the argument an employee could be affected by medical marijuana use while on duty or in "safety-sensitive positions."

It also rejected an attempt by Emerald Steel to raise new issues on appeal, including the fact that marijuana remains illegal under federal law despite state law allowing its use for medical purposes.

"Accordingly, we will not consider those issues for the first time on review," Sercombe wrote.

Medical marijuana has been opposed by the construction industry, which wants laws to prohibit medical marijuana users from potentially hazardous jobs such as operating heavy machinery.

Associated General Contractors has lobbied for laws defining safety-sensitive jobs, including driving large trucks, handling explosives, working at construction sites and other jobs listed as hazardous under state work safety laws.

Supporters of restrictions on medical marijuana use, including state Rep. Mike Schaufler, D-Happy Valley, have said they are trying to ensure public safety.


But medical marijuana activist John Sajo says that during legislative hearings last year, nobody was able to identify a single case where a medical marijuana patient had caused a workplace accident or problem.

He also said the vast majority of medical marijuana patients are too ill to work.

Eleven other states — Alaska, California, Colorado, Hawaii, Maine, Montana, Nevada, New Mexico, Rhode Island, Vermont and Washington state — have medical marijuana laws.

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AIDS Drugs Reaching More People in Developing World, U.N. Says - washingtonpost.com

UNITED NATIONS, June 9 -- About 3 million people infected with the AIDS virus in the developing world received life-prolonging antiretroviral drugs last year, a 42 percent increase over 2006 in the number with access to the medicines, a U.N. report said Monday.

But U.N. officials cautioned that 70 percent of AIDS victims still have no access to the medicines and that the number of newly infected people worldwide in 2007 was still 2.5 times the number receiving treatment. HIV/AIDS remains the leading cause of death in sub-Saharan Africa.

The new figures were in a report released by Secretary General Ban Ki-moon on the eve of a high-level meeting at U.N. headquarters to review progress in the international fight against AIDS. The meeting on Tuesday and Wednesday will be attended by eight presidents and more than 90 prime ministers, foreign ministers and health ministers.

The growing availability of AIDS treatment for the world's poor marks an important breakthrough in addressing the epidemic, the report said. Five years ago, only about 200,000 people in developing countries could get the drugs -- the vast majority of them in Brazil. Although the multiple-drug regimens have dropped dramatically in price, they remain out of reach for many.


"Since 2006, progress in response to HIV is evident in many regions," the 27-page report stated. "However, progress is uneven, and the expansion of the epidemic itself is often outstripping the pace at which services are being brought to scale."

At a time when overall foreign assistance to the developing world has been shrinking, funding for HIV-related activities has grown tenfold over the past decade, reaching $10 billion in 2007. U.N. officials said the new figures showed that the investment has paid off.

The number of AIDS-related deaths decreased from 3.9 million in 2001 to 2.1 million in 2007, and the number of newly infected people decreased from 3.2 million in 1998 to 2.5 million in 2007. Still, "the breadth and severity of the epidemic remain unmatched in modern times by any other infectious diseases," the report said.

The number of AIDS cases is still rising in some countries, including China, Russia, Indonesia and Ukraine. Peter Piot, executive director of UNAIDS, the U.N. agency created in response to the epidemic, said the increase in AIDS infections in China has been fueled in part by mass movements of temporary laborers, by an increase in disposable income in the hands of male workers and by a rise in socioeconomic inequality, which has driven some poor women into prostitution. He also cited an increase in men having sex with other men.

The report found that access to AIDS treatment was uneven. Availability has soared in several countries in Asia and Africa. Sixty percent of AIDS patients in Rwanda had access to antiretroviral drugs last year -- up from 1 percent in 2003 -- as did 88 percent of Namibians with AIDS. The number of people getting treatment in Thailand and Vietnam increased more than tenfold during the same period.

But some of the nations hit hardest in Africa -- including Lesotho, South Africa and Swaziland -- have seen little improvement in the rate of new infections. Nearly 26 percent of adults 15 to 49 years of age in Swaziland are living with HIV/AIDS.

Even Uganda, one of the first African countries to see a reduction in AIDS infection rates, is showing renewed signs of trouble. "Recent surveys have revealed increases in risk behaviors and a decline in knowledge about HIV among young people" there, the U.N. report said.

"Serious challenges remain," Ban said. "In several countries, prevalence is rising among young people as well as women and girls. Five million Africans still need treatment."

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VOA News - Hong Kong to Slaughter All Live Poultry in Markets Following Bird Flu Outbreak

Hong Kong plans to slaughter all live poultry in the territory's markets following the appearance the H5N1 strain of bird flu. As Naomi Martig reports from Hong Kong, this is the most serious outbreak of the virus in the city where it was discovered in five years.

Woman walks past some cooked chickens outside restaurant in Hong Kong, 12 Jun 2008<br /> <br /><br /><br />
Woman walks past some cooked chickens outside restaurant in Hong Kong, 12 Jun 2008
Hong Kong authorities say the cull affects all retail poultry vendors, and about 3,500 birds will be killed to prevent the spread of the disease.

The move follows an outbreak of the H5N1 virus on Saturday, which led authorities to suspend live poultry imports from mainland China. Days later, the virus appeared in three city street markets - the first outbreak in the markets in five years.

The government plans to compensate vendors who face losses because of the cull.

Peter Cordingley, a spokesman for the World Health Organization regional office in Manila, says despite the financial concerns that bird flu outbreaks create, officials in Hong Kong were wise in reporting first, and culling fast.

"Right at the beginning of this outbreak in 2003-2004, there were some governments in the region who were reluctant to tell the world what was going on because they were frightened of the impact on their poultry trade and also about tourism," he said. "They discovered pretty quickly that the costs of not reporting the outbreak were far higher than any costs they might have incurred in losses of exports and incoming tourists. There is no way around this."

Hong Kong drew praise from international medical experts in 1997, when the virus appeared for the first time ever, and crossed from birds to humans. Eighteen people in the city contracted the virus, and six died. Researchers in Hong Kong quickly identified the new virus, and the government slaughtered the city's entire poultry population - about one and a half million birds.

That cull appeared to have kept the virus contained until 2003, when it appeared in Southeast Asia and then spread across Asia to Europe and Africa. It killed tens of millions of birds and forced government culls of even more.

Cordingley says Hong Kong set the benchmark in 1997, and now, for the vigilance that is needed to prevent the spread of the disease.

"Hong Kong sits at the edge of a volcano," he said. "If you look at Hong Kong geographically, it is surrounded by the virus and they managed to keep the virus out because they put in place a whole host of precautions. They've worked very well until now."

Since the latest outbreak began in 2003, more than 240 people have died of bird flu, mostly in Asia. The majority of human bird flu cases involved contact with infected poultry. Experts fear, however, that the virus will change into a form that will spread easily among humans, causing a worldwide epidemic.

Southern China is suspected of being the source of several flu epidemics in the past. In 2002, the virus known as SARS first infected humans there and went on to infect more than 8,000 people around the world, killing almost 800. Because of the risk of contagious illnesses spreading throughout the crowded city, Hong Kong has developed internationally recognized virus research facilities, and a system to rapidly respond to outbreaks.

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NewsHour Extra: Student Voice | Could Obama and Clinton be the Golden Ticket? | June 12, 2008 | PBS

The Democratic race to the White House has been nothing short of compelling. Record numbers of young voters have come out in support of their favorite candidate and many more have been actively campaigning.

The Democrats haven't had such a popular race in years. Barack Obama and Hillary Clinton made history and broke boundaries with their intense primary battle. While Barack Obama has finally won the nomination, some Democrats can't help but ask: Why can't it be both?

Much talk has been circulating about a possible Obama-Clinton campaign, but of course no one knows for sure. Though there is no certainty to these rumors, what is certain is that many are curious to discover what the combination would be like, and if it would be beneficial to both the country and the Democratic Party.

Different strengths

What truly separates Barack and Hillary is experience, or the lack thereof. Their campaigns focused on two entirely different mottos: Hillary's was one of experience and stability, while Barack is running as a fresh face and a candidate of change. Even those who chose to vote for Obama can recognize the fact that Hillary is highly qualified. She's been in the Senate for seven years, and was a First Lady for eight. She's passed three legislative acts and is part of four Senate committees.

On the other hand, the charismatic Obama only has three years in the Senate, and has passed two legislative acts. He too is part of four Senate committees; however, matched up against many candidates, Barack Obama does seem to come up short. Why then was he able capture the nomination?

The answer is simple. He's full of life, a great orator, and he represents all that America is hoping for in the near future. This difference between them is one of the main reasons why they seem like they'd be a phenomenal team. An Obama-Clinton administration would have both Hillary's experience and knowledge and Barack's charisma. But the question still remains: could the combo happen, and what do people think?

Bringing sides together

As of now, the two seem to be an unlikely pair. They've traded nasty remarks and allegations. It seems as though the Democratic party is divided. Obama supporters still resent the attacks made by Hillary and Bill Clinton, while Clinton supporters insist that Obama is way in over his head.

Many of Obama's fans are unsupportive of Hillary as vice president. They are apprehensive of the fact that Bill Clinton is so involved in Hillary's political situation and also of her political baggage. As many Obama supporters have stated, their message is totally different from everything that Clinton stands for. The Obama campaign is all about change and being new, which is everything Hillary Clinton is not.

While the primary race is over, there is still a divide among Democrats that needs to be fixed. Both Obama and Clinton have something unique to bring to the American people and the country. In the end, it is still a mystery when it comes to who Obama will pick as his running mate, but I truly think it'd be one interesting administration if these two political opposites joined together.

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The Associated Press: Obama site confronts rumors

WASHINGTON (AP) — Democrat Barack Obama's campaign said Thursday that Michelle Obama never used the word "whitey" in a speech from the church pulpit as he launched a Web site to debunk rumors about himself and his wife.

The rumor that Michelle Obama railed against "whitey" in a diatribe at Chicago's Trinity United Church of Christ has circulated on conservative Republican blogs for weeks and was repeated by radio talk show host Rush Limbaugh. The rumor included claims of a videotape of the speech that would be used to bring down Obama's candidacy this fall.

"No such tape exists," the campaign responds on the site, http://www.fightthesmears.com. "Michelle Obama has not spoken from the pulpit at Trinity and has not used that word."

The site is a response to the realities of a brave new world, where information travels 24 hours a day on blogs and voters are increasingly turning to the Internet for information. It's a particular problem for Obama, a relative newcomer to national politics who is still unknown to many voters and has been the target of persistent misinformation campaigns online.

E-mails about Obama rank No. 2 on the list of "Hottest Urban Legends" on snopes.com, an Internet rumor-debunking site, behind e-mail greeting cards that could expose computers to viruses.

Michelle Obama has often been the target of conservative attacks, prompting Obama to demand his rivals "lay off my wife." Much of the criticism came from her comment that her husband's campaign has made her proud of her country "for the first time," a remark that inspired a Tennessee Republican Party Web video questioning her patriotism.

There have also been more insulting attacks, and not just limited to the Internet. The Fox News Channel recently labeled her as "Obama's baby mama" and also raised the inflammatory suggestion that she gave her husband a "terrorist fist jab" when they bumped knuckles the night he clinched the nomination.

The Obamas recently resigned from Trinity, where the Rev. Jeremiah Wright was the longtime pastor. Wright came under fire for sermons in which he cursed America and accused the government of conspiring against blacks. Video of the sermons spread quickly on the Internet and threatened great damage to Obama's campaign.

Other false claims about the Illinois senator _that he's secretly a Muslim who refuses to say the Pledge of Allegiance and is intent on destroying America — spread widely during the primary campaign, and the candidate made it a habit of telling audiences to respond to e-mail rumors to set the record straight.

Barack Obama bristled when a reporter asked him about the "whitey" rumor on his campaign plane last week, saying it was nonsense that shouldn't be repeated in questioning by a mainstream reporter.

"It is a destructive aspect of our politics right now," Obama told his traveling press corps. "And simply because something appears in an e-mail, that should lend it no more credence than if you heard it on the corner. And you know, presumably the job of the press is to not go around and spread scurrilous rumors like this until there's actually anything, one iota of substance or evidence that would substantiate it."

At the same time, his campaign was preparing the site to help stop lies that are spreading online.

The site explains that Obama is "a committed Christian" who never attended a radical madrassa during his childhood in Indonesia. With chain e-mails falsely claiming Obama was sworn into the Senate on the Quran, the holy book of Islam, the Web site includes a photo showing him taking his oath of office on the family bible.

It shows C-SPAN video of Obama leading the Pledge of Allegiance with his hand over his heart as he presided over the Senate on June 21, 2007. It encourages people to send e-mail to friends and "spread the truth."

"The Obama campaign isn't going to let dishonest smears spread across the Internet unanswered," said Obama spokesman Tommy Vietor. "It's not enough to just know the truth, we have to be proactive and fight back."

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US weekly jobless claims up 25,000 to 384,000 UPDATE - Forbes.com

WASHINGTON (Thomson Financial) - The number of individuals filing new claims for unemployment insurance rose above expectations, while the number of those continuing to receive unemployment insurance rose to its highest level in more than four years, the Labor Department said on Thursday.

The number of first-time claims filed in the week ending June 7 increased 25,000 to 384,000, well above the 365,000 claims economists polled by Thomson Reuters IFR Markets were expecting. Initial claims in the previous week were upwardly revised by 2,000 to 359,000.

A Labor Department official said some of the increase in the report may have been due to volatility in the seasonal adjustment factors.

'This number strongly supports our view that last week's drop in claims was due to seasonal adjustment problems caused by the Memorial Day holiday,' said Ian Shepherdson of High Frequency Economics. 'We now expect claims to hover around this level for the next few weeks, before the annual chaos caused by the automakers' retooling shutdowns begins.'

Labor reported that the four-week moving average for initial claims increased 2,500 to 371,500. Economists prefer the four-week moving average because it smoothes out fluctuations in weekly data.

'The key point here is that the underlying trend in claims continues to grind higher, as it should at this point in the cycle,' Shepherdson said.

For the week ended May 31, the number of individuals continuing to receive unemployment insurance rose by 58,000 to 3.139 mln, above the 3.120 mln claims economists were expecting. Continuing claims in the week reached their highest level since February 2004. Continuing claims in the previous week were downwardly revised by 12,000 to 3.081 mln.

The four-week moving average for continuing unemployment claims increased 16,500 to 3.099 mln, the highest level since February 2004. Contiuing claims measure on a four-week moving average basis are 23.7 pct higher than they were a year ago, 'which is indicative of considerably weaker labor market conditions because it indicates that those who are unemployed are finding it increasingly difficult to get re-employed,' said Joshua Shapiro of MFR.




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Freddie Mac says mortgage rates are at an 8-month high - Jun. 12, 2008

NEW YORK (CNNMoney.com) -- Rates on 30-year fixed mortgages have surged nearly a quarter percentage point to an 8-month high on growing concerns about inflation, mortgage backer Freddie Mac said Thursday.

Freddie Mac (FRE, Fortune 500) said 30-year fixed-rate mortgages averaged 6.32% with an average of 0.7 point in the week ending Thursday, up from 6.09% last week. Last year at this time, the 30-year loan averaged 6.74%.

The last time the 30-year fixed rate mortgage was higher was the week ended Oct. 25, when it averaged 6.33%.

"Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman (Ben) Bernanke and Vice Chair (Donald) Kohn, expressed concern over a threat of inflation," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

"This led some market participants to believe that the Fed will raise rates more aggressively over the year than previously thought," Nothaft added.

The 15-year fixed-rate mortgage this week averaged 5.93% with an average 0.6 point, up from last week when it averaged 5.65%. A year ago at this time, the 15-year fixed rate mortgage averaged 6.43%.

The last time the 15-year fixed-rate mortgage was higher was the week ended Oct. 25, when it averaged 5.99%.

"Inflation concerns are still continuing, so that would suggest some upward pressure on interest rates," said Keith Gumbinger, Vice President of HSHAssociates.com, an online publisher of consumer loan information.

Five-year adjustable-rate mortgages (ARMs) averaged 5.70% this week, with an average 0.7 point, up from last week when it averaged 5.51%. A year ago, the 5-year ARM averaged 6.37%.

One-year ARMs averaged 5.09% this week with an average 0.6 point, up from last week when it was 5.06%. At this time last year, the 1-year ARM averaged 5.75%.

Other news in the housing market has been more mixed. The number of homes under contract to be sold rose 6.3% in April, according to National Association of Realtors, showing that buyers were out shopping for bargains.

As interest rates move higher, buyers leave the market, and the lack of demand pushes home prices lower, according to Gumbinger. "The higher interest rates put renewed pressure on home prices," he said.

Single-family home prices dropped 7.7% in the first quarter, according to the National Association of Realtors. The year-over-year drop was the largest decline since the association began reporting on home prices in 1982.

"Serious delinquencies (loans overdue 90 days or more or in foreclosure) for both prime and subprime conventional mortgages nearly doubled between first quarter of 2007 and 2008, according to the Mortgage Bankers Association," added Nothaft.
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Oil Slides as Dollar Firms - WSJ.com

Crude-oil futures retreated by more than $4 a barrel Thursday, as the dollar strengthened after a report showing better-than-expected consumer spending.

The front-month July light, sweet, crude contract on the New York Mercantile Exchange was trading $3.97 lower at $132.41 a barrel, recovering slightly from a $131.55-a-barrel intraday low.

According to Commerce Department data, U.S. retail sales rose 1.0% in May, double the rate expected, signaling consumers are spending economic stimulus payments and that the economy might not be as weak as feared.

The euro slipped against the dollar, trading at $1.5414 from $1.5557 late Wednesday.

"That's the main factor really, there hasn't been a lot of overnight news," said Andy Lebow, senior vice president for energy at brokerage MF Global. "This has been one of the powerful trends in the market. As the dollar weakened, commodity prices have strengthened, and as the dollar strengthened, commodity prices weakened."

Starting last summer, oil prices and the dollar's relative value seemed to work in tandem, with moves down by the greenback accompanied by new record highs for crude. A weaker dollar allows buyers using stronger foreign currencies to bid up prices. In addition, a weak dollar is considered to be a harbinger of inflation as imports to the U.S. become more expensive, leading many investors to turn to oil as a hedge against broadbased price rises.

The relationship between oil and the dollar isn't consistent, however, as the two had decoupled for about a month before the trading strategy returned last week, driving oil futures to all-time intraday highs past $139 a barrel on the Nymex.

Oil prices now are bound in a range between $130 and $140, caught between worries about limited global crude supplies and signs that demand is weakening in the face of record prices.

"Until we break out of that range, we're going to see some wild gyration back and forth," said Addison Armstrong, director of market research at Tradition Energy. "We're getting buffeted by the dollar one day and down the next. Until we see some definitive move on the dollar we're stuck."

Overnight U.K. Prime Minister Gordon Brown confirmed he will travel to Jeddah, Saudi Arabia to attend meeting convened by the Saudis to bring big oil consumers and producers together. The meeting, scheduled for June 22, is at the head-of-state level, and will give participants a chance to address high oil prices blamed for crippling global growth. Saudi Arabia is the largest producer within the Organization of Petroleum Exporting Countries.

"There's not much that OPEC can do," said Mr. Armstrong. "In the near term, we have a very difficult supply and demand situation that has to be worked out."

Market participants don't expect OPEC member nations to make any decisions on output at the meeting. OPEC has said it believes financial speculators such as hedge funds are behind crude's scorching run past $100 a barrel.

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Bloomberg.com: Worldwide

June 12 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit plans to shut down Old Lane Partners, the hedge-fund group he co-founded and sold to the bank last year for more than $800 million.

Citigroup will purchase most of Old Lane's assets, and clients can start withdrawing their investments beginning July 31, the New York-based bank said in a statement today. The wind- down is at least the fourth failure for Citigroup's hedge-fund management unit this year.

``It raises more red flags as far as the credibility of the board of directors as well as management,'' said Bill Smith, president of Smith Asset Management, which manages about $80 million and owns Citigroup shares.

Citigroup has booked more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year. Pandit, who took over as CEO in December, outlined plans last month for the company to sell $400 billion of assets. More than a dozen hedge funds have closed, needed cash infusions or been liquidated this year. Peloton Partners LLP folded in March after wrong-way bets on mortgage securities.

Taking on Old Lane's holdings will increase Citigroup's assets by about $9 billion in the second quarter, the company said. Citigroup's so-called Tier 1 capital ratio, a measure of the bank's ability to absorb loan losses, would have dropped to 7.7 percent from 7.74 percent as of March 31 had those assets been included at the time, the bank said.

Recruiting Method

Citigroup Vice Chairman Lewis Kaden said in an April interview with Fortune magazine that the July 2007 Old Lane purchase was a way for the bank to recruit Pandit as well as John Havens, who was promoted in March to head investment banking, trading and hedge funds, and Brian Leach, who became chief risk officer.

``This transaction is an investment as much as it is an acquisition,'' ousted Citigroup CEO Charles Prince said of the deal in April last year, citing the 20-year track records of Pandit and Havens.

Citigroup has declined almost 40 percent on the New York Stock Exchange since Pandit, 51, took over in December. The shares rose 82 cents to $20.03 in composite trading at 12:04 p.m.

The bank took a first-quarter charge of $202 million to write down the value of its investment in Old Lane, according to a regulatory filing in May.

First-Quarter Loss

The writedown contributed to a net loss of $509 million in the hedge-fund unit during the first quarter. Overall, Citigroup reported a net loss of $5.1 billion, the second biggest in its 196-year history, because of writedowns on mortgage-related bonds and leveraged loans and an increase in consumer-debt delinquencies.

All former Old Lane partners, including Pandit, will be required to maintain their investments in the Old Lane funds or other designated Citi Alternative Investments funds.

``All investors in the fund -- third parties, Old Lane employees, Citi senior management and Citi proprietary investments -- will be treated consistently during the unwind process,'' Ned Kelly, chief executive officer of Citi Alternative Investments, said in the statement.

Pandit, Havens and Leach all worked at Morgan Stanley, the second-biggest U.S. securities firm by market value, before they co-founded Old Lane. Pandit received $165.2 million from Citigroup last year for his stake in Old Lane, then reinvested $100.3 million, after tax, into the fund, according to a March regulatory filing.

`Legacy Assets'

Pandit has said he'll get rid of ``legacy assets,'' including real-estate holdings and collateralized-debt obligations such as bonds backed by pools of mortgages.

``Closing down Old Lane is probably not something they wanted to do, but $9 billion for Citigroup, in the bigger scheme of things, is not disastrous,'' said Royal Bank of Scotland analyst Corinne Cunningham.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising assets and participate substantially in profits from money invested.

To contact the reporters on this story: Joyce Moullakis in London at jmoullakis@bloomberg.net; Josh Fineman in New York at jfineman@bloomberg.net.

Last Updated: June 12, 2008 12:37 EDT
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Bloomberg.com: Worldwide

June 12 (Bloomberg) -- Lehman Brothers Holdings Inc. replaced Chief Financial Officer Erin Callan and President Joseph Gregory after the firm failed to quell speculation about mounting losses and stem a 60 percent plunge in the stock this year.

Callan, 42, who has been Lehman's public face in television appearances and magazine profiles since she was promoted to CFO six months ago, will return to the firm's investment banking unit and be succeeded by co-chief administrative officer Ian Lowitt. Herbert ``Bart'' McDade, the 48-year-old head of the equities business worldwide, will replace Gregory, the New York-based firm said today in a statement.

Chief Executive Officer Richard Fuld has seen Lehman's ability to remain independent called into question this week after the company posted the first quarterly loss since it went public in 1994 and turned to outside investors for a $6 billion cash infusion. Merrill Lynch & Co., Wachovia Corp. and Oppenheimer & Co. cut their ratings on the stock and hedge-fund manager David Einhorn said the firm hasn't fully disclosed its high-risk assets.

``The new investors who bought in this week probably asked for some heads to roll,'' said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors, which oversees $13 billion and invests in options to buy and sell Lehman shares. ``But when you don't bring a proven captain to turn things around, it's more like re-arranging the deck chairs on the Titanic. This might be too little at this point.''

Lehman, the fourth-biggest U.S. securities firm, rose 20 cents, or 0.8 percent, to $23.95 at 12:31 p.m. in New York Stock Exchange composite trading.

No Material Change

``News like this, totally unexpected on the heels of a large share offering, rattles investors,'' said David Killian, a portfolio manager at Malvern, Pennsylvania-based Stoneridge Investment Partners, which sold the last of its Lehman shares yesterday. ``When their CFO leaves, it raises concern about the accuracy of the financials. Has the CFO been taken out of the position because there is a mistake yet to be disclosed?''

Lehman said in a separate statement today that it doesn't expect to disclose any ``material changes'' to the preliminary financial results released on June 9. The firm will publish final figures for the quarter on June 16.

Fuld's decision to push aside top executives amid the credit- market turmoil mirrors steps taken by his counterparts at rival Wall Street firms.

Cayne, Mack

Bear Stearns Cos. CEO James ``Jimmy'' Cayne ousted co- president Warren Spector in August, and wound up losing his own post and then his firm to a takeover by JPMorgan Chase & Co. Morgan Stanley CEO John Mack has fared better since firing Co- President Zoe Cruz, whom he held responsible for the bank's mortgage-related losses.

Gregory ``has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a firm,'' Fuld, 62, said in the statement. ``This has been one of the most difficult decisions either of us has ever had to make.''

Callan got high marks from investors and analysts during her first earnings conference call after being appointed in December for being direct and open about the firm's finances. Portfolio magazine dubbed her ``Wall Street's Most Powerful Woman'' in an April profile. Then Einhorn, who has bet Lehman shares will fall, challenged her credibility in a speech last month, saying she spoke with him privately and later changed her story about how the firm had valued a private equity investment.

`New Face'

``Six months ago everybody loved her as the new face,'' said Tom Jalics, a Cleveland-based analyst at National City Bank, which manages $34 billion, including Lehman shares. ``But the Einhorn dispute did her in.''

Callan wasn't immediately available to comment today, according to a company spokeswoman.

Gregory, six years younger than Fuld, ran the day-to-day operations of the firm and hasn't been involved with trading, which is Fuld's strength.

McDade, who ran the fixed-income division for three years before being appointed to head equities, is considered by current and former Lehman executives to be a leading candidate to succeed Fuld. The equities division grew during McDade's tenure to account for one third of the firm's revenue, as Lehman became the largest trader of stocks on the London Stock Exchange and Euronext.

``It's positive that Fuld isn't bringing people from outside,'' said National City's Jalics. ``McDade has been around for 25 years, knows the firm well, ran fixed income then equities. He's a good choice.''

Lowitt, 44, was the treasurer of the firm between 2000 and 2005 before being appointed as chief administrative officer. He has been with the bank since 1994.

Strategic Partner

``By bringing in new players, you could have a new set of eyes to validate prior disclosures,'' said Stoneridge's Killian. ``It could also indicate that they're ready to evaluate strategic options and partner with a larger, more diversified firm.''

While Lehman may consider selling a stake to a strategic partner, Fuld is unlikely to sell the whole firm, UBS AG analyst Glenn Schorr said in an interview last week. Many of Lehman's bigger rivals have also been weakened by the subprime crisis, making it unlikely they could buy the firm, Schorr said.

To contact the reporters on this story: Yalman Onaran in New York at yonaran@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.

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United Matches American Airlines In Charging for First Checked Bag - WSJ.com

UAL Corp.'s United Airlines will charge passengers on domestic flights $15 each way for the first checked bag, becoming the second carrier to attempt to defray soaring fuel costs by charging for services formerly provided as a courtesy.

The move by United and AMR Corp.'s American - the nation's two biggest carriers - likely means smaller airlines will follow their lead.

The fee won't apply to customers who are flying in first or business classes or who have premier status with United or Star Alliance.

In addition to the first-checked-bag fee, overweight bags, third bags or items that require special handling will increase from $100 to $125 or from $200 to $250, depending on the item.

The changes apply to customers who purchase a domestic ticket on or after June 13. For travel to and from Canada, Puerto Rico and the U.S. Virgin Islands, the fee will be charged on tickets bought on or after Aug. 18.

"With record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for," Chief Operating Officer John Tague said.

United estimates that the new $15 service fee will apply to one out of three customers. The potential revenue from baggage-handling fees, including those for checking a first and second bag, will be approximately $275 million a year. The fee to check a second bag is $25 each way and also applies to only some customers.

United was the first to enact the fee in February, and rivals soon followed suit as fuel costs continued to soar. They have forced airlines to charge for a range of services -- such as checking in bags -- that were previously considered part of the ticket price, as well as identifying new ways to extract revenue from passengers. It has also prompted carriers, including United, to slash projected capacity for late this year and ground gas-guzzling older planes.

Write to Mike Barris at mike.barris@dowjones.com

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Bloomberg.com: U.S.

June 12 (Bloomberg) -- Retail sales in the U.S. rose twice as much as forecast in May as Americans snapped up electronics, clothes and furniture, evidence that they aren't hoarding their tax-rebate checks or using them just to pay for gasoline.

Purchases climbed 1 percent, the most in six months, following a 0.4 percent April gain that was previously reported as a drop, the Commerce Department said in Washington. Sales excluding gasoline increased 0.8 percent last month.

The figures suggest that consumers, whose spending accounts for more than two-thirds of the economy, are helping stave off a deeper downturn. Stocks rose, while Treasury notes slumped as the report reinforced investors' expectations that the Federal Reserve will increase interest rates later this year.

``It's just amazing -- the American consumer's resilience in the face of everything negative,'' Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said in an interview with Bloomberg Television.

The decline in Treasuries sent benchmark 10-year note yields rising to 4.18 percent at 11:54 a.m. in New York, from 4.07 percent late yesterday. The dollar gained 0.9 percent to $1.5417 per euro. The Standard & Poor's 500 retailing index, which includes Target Corp. and Lowe's Cos., jumped 2.5 percent to 388.65. The S&P 500 index climbed 1.2 percent.

Import Prices

A separate report today showed that prices of goods imported to the U.S. rose 2.3 percent in May from the previous month, less than economists had forecast.

Initial claims for unemployment benefits rose to 384,000 last week from 359,000 the prior week, the Labor Department also reported today.

Today's sales report showed demand at every merchant category increased last month, except for miscellaneous retailers. Excluding autos, sales rose 1.2 percent, also exceeding the median forecast of a 0.7 percent rise.

Wal-Mart Stores Inc., the world's largest retailer, had a 3.9 percent jump in same-store sales last month, as consumers bought cut-rate staples and took advantage of promotions linked to the tax rebates.

``Many of our customers need to live from paycheck to paycheck,'' Wal-Mart Chief Financial Officer Thomas Schoewe told reporters last week. ``The amount they're spending on basics is a big portion of the total basket.''

Toys ``R'' Us Inc., the largest U.S. toy-store chain, this week said it posted a narrower first-quarter loss as sales for the three months that ended May 3 climbed 5.3 percent to $2.72 billion. Costco Wholesale Corp., the largest U.S. warehouse-club chain, said last week May sales at stores open at least a year rose 9 percent, beating analysts' estimates.

Bernanke Assessment

Today's figures bear out Fed Chairman Ben S. Bernanke's assessment this week that risks of a ``substantial downturn'' have receded.

Morgan Stanley economists raised their estimate for second- quarter economic growth after the report to 0.5 percent from a 0.2 percent contraction.

Bernanke, Fed Vice Chairman Donald Kohn and at least three district-bank presidents this week warned that the central bank must keep inflation expectations in check. The remarks stoked investors' bets on a rate boost in the second half of 2008.

Traders see a 94 percent chance the Fed will raise its main rate from 2 percent by the end of the September meeting, futures contracts show.

Purchases of electronics increased 0.7 percent and sales at department stores jumped 1.2 percent, the most since March 2007. Building-material retailers sold 2.4 percent more than in the prior month.

Car Sales

Sales at automobile dealerships and parts stores increased 0.3 percent after dropping 2.1 percent in April. That contrasts with industry figures that showed cars and light trucks sold at an annual pace of 14.3 million annual pace in May, the fewest in almost a decade, as sales of pickup trucks and sport-utility vehicles plummeted.

The surge in fuel costs is ``a structural change, not just a cyclical change,'' General Motors Corp. Chief Executive Officer Rick Wagoner said June 3 as Detroit-based GM said it would close four North American pickup and large SUV factories and focus more on making small, fuel-efficient cars.

Filling station sales surged 2.6 percent in May. Regular gasoline reached as high as $3.98 a gallon in late May, about 53 cents more than the average for the prior month, according to AAA.

GDP Impact

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product, sales climbed 0.8 percent, after a 1 percent increase the prior month. The government uses data from other sources to calculate the contribution from the three categories excluded.

Most economists aren't convinced the jolt from the stimulus checks will last.

``This good report suggests the tax rebates are having an impact,'' Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Radio interview. ``As these tax-rebate effects fade, the weaker job market is going to take over.''

The Fed's Beige Book regional business survey yesterday indicated the economy was ``generally weak'' in late April and May as consumer spending slowed. Still, five of the 12 districts reported that growth was ``stable,'' an increase from three in the previous survey, issued April 16.

Spending may grow at an annual rate of 0.8 percent this quarter, down from a 1 percent pace in the prior quarter and the weakest since the first three months of 1995, according to the median estimate of economists surveyed by Bloomberg News this month.

The bulk of the tax rebates will probably be spent from July through September, giving third-quarter growth a lift, before the economy decelerates again in the last three months of the year, the Bloomberg poll also showed.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Obama establishes lead over McCain: Poll- Politics/Nation-News-The Economic Times

NEW YORK: Presumptive Democratic candidate for the US presidential election Barack Obama has established a small early lead over his rival Republican John McCain, a new poll shows.

The poll, conducted for Wall Street Journal and NBC, shows that Obama is leading McCain by 47 per cent to 41 per cent. But still the lead is significantly smaller than the Democratic Party's 16-point advantage, 51 per cent to 35 per cent, when voters are asked, without candidates' names, which party they want to win the White House.

Record unpopularity of President George Bush and the Republican Party, combined with economic worries among voters and a broad desire for change, would normally make this "the single best year for an Obama-type candidacy, and the single worst year for a McCain-type candidacy," says Democratic pollster Peter Hart, who conducts the Journal/NBC poll with Republican Neil Newhouse.

But Obama continues to do poorly among white male voters, according to the poll. More ominous is his weakness among white suburban women, who generally are open to Democratic candidates and whose votes could be decisive.

While Obama has a slight lead among white women generally, a plurality of suburbanites prefer McCain.

Some good news for the likely Democratic nominee: Despite suggestions during the nomination contest that many Hispanics and Hillary Clinton supporters wouldn't support him, the poll shows both groups overwhelmingly do.

The poll of 1,000 registered voters was conducted from Friday through Monday, a "propitious time" for Obama, Hart noted, as Clinton had conceded and endorsed her rival on Saturday.

Despite that timing and an "exceptionally strong" year for Democrats generally, Obama and McCain are in "a very competitive race for president," says Democratic pollster Hart.

The poll's margin of error is 3.1 percentage points. White men make up 40 per cent of the electorate, and the Arizona senator has a 20-point lead over Obama among them, 55 per cent to 35 per cent.

White suburban women, who make up 10 per cent of the electorate, prefer a Democrat to be president by 11 points, 47 per cent to 36 per cent, the poll shows.

And if Clinton were the nominee and the election were held now, she would beat McCain among this group by 14 points, 51 per cent to 37 per cent. Yet Obama loses to McCain by six points, 44 per cent to 38 per cent, among the same group.

The poll offers some evidence that Obama could be helped slightly by picking Clinton as his running mate. Offered a choice between an Obama-Clinton ticket and a Republican ticket of McCain and former Massachusetts Governor Mitt Romney, 39 per cent of previously undecided voters said they would choose the Democrats, with 26 per cent favoring the Republicans.

Among white suburban women, with Clinton on his ticket, Obama would go from six points down against McCain to a two-point edge.

Among all women, Obama has a big advantage: 52 per cent to 33 per cent over McCain. Among all men, McCain's lead is 49 per cent to 41 per cent, less than half his edge among white men only. Obama leads among independent voters, 41 per cent to 36 per cent.

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