Bloomberg.com: Worldwide

By Alan Bjerga

Aug. 12 (Bloomberg) -- Corn and soybean crops in the U.S., the world's largest producer, avoided the damage investors anticipated in June from the worst flooding in 15 years as ``ideal'' weather helped plants recover, the government said.

The corn crop will be the second-biggest ever and the soybean harvest will be the fourth-largest, the U.S. Department of Agriculture said today in a report. Cash prices for both commodities will be lower than forecast last month, the USDA said, helping to keep food inflation in check.

The USDA's forecast for higher corn yields ``was a surprise and suggests the crops were never as bad as people thought back in the middle of the June flooding,'' said Chad Henderson, a market analyst for Prime Agricultural Consultants in Brookfield, Wisconsin. ``Both corn and soybeans will need an extended growing season'' to reach full potential, he said.

The floods sent crop prices surging, fueling concerns food prices would soar. Corn reached a record in late June, more than doubling from a year earlier, and soybeans touched an all- time high of $16.3675 a bushel on July 3, jumping 92 percent in 12 months. Since then, both commodities have plunged.

The USDA predicted a corn crop of 12.288 billion bushels, based partly on surveys of farmers in flood-affected states during July and August, after the waters receded. That's up 4.9 percent from last month's forecast. The soybean harvest will total 2.973 billion bushels, the USDA said, down just 0.1 percent from the month-ago projection.

Corn, Soybean Futures

Corn yields will rise to 155 bushels an acre, 4.4 percent more than estimated in July, the department said.

The corn-crop forecast is a ``negative number for the market,'' said Greg Grow, director of agribusiness for Archer Financial Services in Chicago. ``Buyers will wait for lower prices closer to harvest before increasing coverage.''

Corn futures for December delivery rose 2.5 cents, or 0.5 percent, to $5.195 a bushel at 12:04 p.m. on the Chicago Board of Trade, after earlier falling as much as 2.4 percent. Before today, the most-active contract had dropped 35 percent from the record high of $7.9925 a bushel on expectations that the flood damage was not as bad as first thought.

Soybean futures for November delivery rose 13.5 cents, or 1.1 percent, to $12.095 a bushel in Chicago. Yesterday, the price at one point touched $11.68, the lowest since April 1. The most-active contract before today had dropped 27 percent since reaching the record.

Cash Prices

The USDA reduced its estimates for cash prices for both crops in the marketing year that starts Sept. 1. Corn will average $5.40 a bushel, down from $6 projected in July, while soybeans will sell for about $12.25 a bushel, down from the month-ago estimate of $12.75.

The June floods killed at least 24 people and inundated more than 3.4 million acres. Crops were destroyed in waterlogged fields, threatening to increase food prices already forecast by the USDA to rise as much as 5.5 percent this year, the most since 1989.

A bigger crop should stabilize corn prices and ease inflation pressure on grain- and oilseed-based food products, USDA Chief Economist Joe Glauber said today in an interview. Unlike some past floods, such as the 1993 Midwest deluge most often compared with this year's, farmers had a chance to replant crops with assistance from the weather.

``With wet weather or late planting, sometimes the root system isn't fully developed, so that you really need timely rains'' combined with land that's drying out from overflows, he said. ``The plant population looks pretty good.''

Skeptical Analysts

Some analysts said USDA's yield projection for corn is high and the government may be underestimating the residual damage caused by the June floods, especially in Iowa.

``The thing that surprised me was the fact they increased harvested acres as a percentage of planted acres,'' said Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa. ``I talk to people who tell me about how bad their drowned-out stalks are everyday.''

On June 22, during the height of flooding, the USDA said 59 percent of the corn crop was in good or excellent condition, down from 73 percent at the same time in 2007. For soybeans, it was 57 percent, compared with 66 percent. The USDA yesterday said 67 percent of corn was in good or excellent condition and 63 percent of soybeans, compared with 56 percent for both at the same time last year.

``Abundant rainfall and near- to below-normal temperatures provided nearly ideal conditions for Midwestern corn and soybeans,'' the USDA said in today's report. The department's estimates were made after surveying about 11,000 farmers in Illinois, Indiana, Iowa, Minnesota, Missouri and Wisconsin during July and August.

To contact the reporters on this story: Alan Bjerga in Washington at abjerga@bloomberg.net;

Last Updated: August 12, 2008 13:06 EDT

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Bloomberg.com: Opinion

Aug. 12 (Bloomberg) -- Never mind.

Or, in the words of Merrill Lynch & Co. Chief Executive Officer John Thain, ``Our clients have been caught in an unprecedented liquidity crisis. We are solving it by giving them the option of selling their positions back to us.''

Thain said these words on Aug. 7, after the firm announced it would offer to buy back $10 billion in auction-rate securities from individual investors beginning in January.

The Merrill offer came the same day Citigroup Inc. reached an agreement with regulators to buy back the auction-rate paper it sold to individuals, small businesses and charities, and the day before UBS AG reached a similar agreement to make its customers whole.

There: Auction-rate securities problem solved.

I love the way Thain put the whole episode in present tense, and how he put Merrill in the role of the knight on the white charger, coming to the rescue of investors. If you didn't know what happened, you might be tempted to believe it.

The only question I have for these securities firms' CEOs is: If you had it all to do over again, would you still have stopped supporting these auctions back in February, leaving thousands of customers with investments that they could see but not get their hands on?

`De Minimis'

Thain makes it sound like Merrill's clients were walking around one fine day and all of a sudden stepped in quicksand. He didn't even have the grace to say, ``Mistakes were made,'' which are weasel-words but at least convey that someone made a boo-boo.

The only problem Merrill's clients had was Merrill. The firm sold them auction-rate securities without really telling them how the auctions worked, or that they would stop working if Merrill stopped providing backup bids.

Investors thought they were buying an investment vehicle that was described to them as just like a money-market fund, except with a little more yield. Some brokers apparently didn't even know that their own firm propped up the market, according to the administrative complaint filed on July 31 against Merrill by Massachusetts Secretary of State William Galvin.

Asked what kind of an impact the buyback would have on its balance sheet, Citigroup spokesmen said, ``de minimis,'' a Latin expression meaning insignificant.

Can you imagine? ``De minimis''?

Blood Oath

Let's think about that. I'm sure the company wanted to downplay the impact of the settlement, and maybe sound a little bit flip and even dismissive about it, but what an unfortunate and insulting choice of words.

Thousands of investors at minimum were mightily inconvenienced because they couldn't get at their money.

Their brokers had nothing to tell them, and the firms themselves, at least to judge from the volume and intensity of e- mail I received on this subject, were eerily uncommunicative.

Because of all this, customers have sworn blood oaths against their brokers -- even ones whom they had worked with for years -- and now say they will never trust their securities firms in particular and big Wall Street firms in general ever again -- and this was ``de minimis''? If this was ``de minimis,'' then why was it so important for the big firms to blow up the auction-rate market six months ago?

I wonder, too, just how ``de minimis'' the hundreds of states and municipalities that have had to spend millions of dollars in higher interest and refinancing costs find this whole sorry episode.

Lost to History

Surely the saddest words that accompanied the Citigroup story were: ``Citigroup neither admitted nor denied allegations of wrongdoing.''

This is common practice in securities-firm settlements. The company in question sidesteps the guilt and embarrassment of owning up to its bad behavior.

Now lost to the narrative of ``Lessons Learned From the Great Auction-Rate Securities Freeze of 2008'' are hundreds of pages of e-mails, reports and memoranda that would have documented Citigroup's role in the disaster. I can't imagine that they would have looked very much different from the UBS and Merrill exhibits, but we'll never know.

With the biggest names in the auction-rate securities market now agreeing to provide investors with ``liquidity at par,'' as they call it, we can expect the others to follow suit. It will be interesting to see the next act of this performance, because, as you know, the show never ends. How will the auction-rate securities be repackaged for sale?

(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net

Last Updated: August 12, 2008 00:01 EDT

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UBS rips up bank structure as rich clients flee - Forbes.com

Switzerland - (Updates with closing price, Olivant comment)

By John O'Donnell and Sam Cage

ZURICH, Aug 12 (Reuters) - UBS (nyse: UBS - news - people ) will separate its troubled investment bank from its prized wealth management arm, paving the way to sell the business that made it Europe's biggest casualty of the credit crunch.

The world's No.1 banker to the rich gave in to shareholder pressure to restructure on Tuesday, admitting there were problems keeping the two businesses integrated.

"It might be that we keep or divest or enter into joint ventures or collaboration," Chairman Peter Kurer told journalists, adding that there were no plans yet to sell parts of the business.

As peers such as Credit Suisse drew a line under the crisis, there were further reminders of the damage the investment bank has wreaked at UBS as investment writedowns climbed a further $5 billion to top $42 billion.

It haemorrhaged 44 billion Swiss francs ($41 billion) in the second quarter as investors moved their money to rivals including smaller Swiss banks.

Net new money inflows had been 34 billion francs a year earlier but many well-heeled clients have been scared off by the steady stream of bad news out of the group's Zurich headquarters. UBS has invested 2,000 billion francs for the world's wealthy.

Kurer's change of direction breaks a taboo at UBS, which has long stood by its strategy of running asset management, banking for the rich and investment banking together. These will now be run as autonomous businesses.

The move comes after the bank came under increasing pressure from investor Olivant -- headed by former UBS Chief Executive Luqman Arnold -- which has been pressing for a break-up.

"We believe UBS investment bank will be not fully owned and even potentially disposed of by UBS over the next two years," said JP Morgan analyst Kian Abouhossein.

Investors welcomed the decision, sending UBS's shares up initially although they later slipped and closed 2.4 percent lower at 22.62 Swiss francs as European peers also fell.

Olivant, which holds 2.78 percent of the ordinary share capital of UBS, welcomed the new strategic direction but cautioned that problems remained, not least to the bank's once rock-solid reputation.

HARD KNOCKS

The Swiss bank also appointed a new finance chief, former investment banking deal broker John Cryan, who last year masterminded the break-up of ABN AMRO which sold itself to a consortium led by the Royal Bank of Scotland (nyse: RBS - news - people ).

"We have learnt our lessons," chairman Kurer told journalists and analysts later, saying the bank would remain independent as it pares back 5,500 staff.

But Kurer and Chief Executive Marcel Rohner still face widespread investor unrest. UBS's share price has tumbled by almost two thirds to record lows since the start of the year -- twice that of European peers.

"We are still not happy with the results," said Helmut Hipper, a fund manager at UBS shareholder Union Investment.

Hipper said that there was evidence that not only Swiss customers were ditching the bank. "A big part of the money outflows were international," he said. "The reputational problems are hitting home internationally." The result in the second quarter -- a bigger-than-expected loss of 358 million francs -- was impacted by UBS's move to buy back bonds it was accused of misselling.

UBS and U.S. rivals Citigroup (nyse: C - news - people ) and Merrill Lynch (nyse: MER - news - people ) remain the three hardest hit in the financial markets turmoil.

Unlike its American rivals, however, UBS is being singled out for tough new rules from the Swiss banking watchdog that will force it to keep back considerably more capital, putting a brake on its investment bank in London and Wall Street.

UBS's admission that the one-bank model is broken comes just a week after rivals HSBC (nyse: HBC - news - people ) and Barclays (nyse: BCS - news - people ) defended the strategy.

** To read more on UBS please double click on (Additional reporting by Albert Schmieder and Steve Slater in London; Editing by Louise Ireland/Elaine Hardcastle)

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Barack Obama shifts on tapping national oil reserves - Los Angeles Times

LANSING, MICH. -- Democrat Barack Obama called today for tapping the nation's strategic oil reserves to help drive down gasoline prices, a shift from his previous position on the issue.

The reversal is the second refinement in Obama's energy policy. Last week, he said that he would reluctantly consider accepting some offshore oil drilling. Obama had previously said he opposed such drilling, which is strongly backed by rival John McCain, who has urged that states be allowed to decide whether to drill.

 

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McCain has been able to score political points on energy issues in recent weeks, particularly in swing states such as Michigan.

Obama is scheduled to campaign this week on energy and economic issues in the battleground Midwest. McCain campaigned in Pennsylvania, where he called on Congress to return from vacation to deal with energy issues. Later, McCain travels to South Dakota.

As part of the Obama campaign's focus on energy, it released a new advertisement criticizing McCain's energy policies.

In his speech in Lansing, Obama, who celebrates his 47th birthday today, tipped his hat to McCain, quoting the Arizona Republican: "Our dangerous dependence on foreign oil has been 30 years in the making and was caused by the failure of politicians in Washington to think long-term about the future of the country," Obama said.

"What Sen. McCain neglected to mention was that during those 30 years, he was in Washington for 26 of them," Obama said.

Obama's plan would release light oil from the emergency oil stockpile and replace it later with heavier crude. Light crude oil is easier to refine into gasoline than heavier oil. In 2000, President Clinton used a similar tactic to make oil available at a time of rising oil prices.

The Obama plan is similar to efforts by congressional Democrats and is opposed by Republicans and President Bush.

House Speaker Nancy Pelosi (D-Ca.) for weeks has called on Bush to withdraw oil from the government reserve, and Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, has tried to get agreement on legislation that would require the release of 70 million barrels of oil from the government stockpile.

The McCain campaign lost no time in criticizing Obama.

"Tapping the strategic oil reserve is not a substitute for a real plan to increase supply through additional drilling and nuclear power," said campaign spokesman Tucker Bounds in a statement e-mailed to reporters.

"The strategic oil reserve exists for America's national security strategy -- not Barack Obama's election strategy. The last release of oil from the strategic reserve came in response to Hurricane Katrina, but the only crisis that has developed since Barack Obama last rejected this idea two months ago is a slide in his poll numbers," Bounds said.

Recent polls show that McCain has gained some traction on the energy issue. For example, the latest Quinnipiac University poll for the Wall Street Journal and washingtonpost.com shows that Obama tops McCain 46% to 42% compared with a previous lead of 48% to 42%.

Energy issues are the leading concern -- more important in most polls than the war in Iraq -- and voters say they support offshore oil drilling. Other polls show similar results in the West and Southwest, also key electoral battlegrounds.

In its new advertisement, the Obama campaign attacks McCain's relationship with the oil industry.

"After one president in the pocket of big oil, we can't afford another," says the ad, referring to President Bush's previous work in the oil industry.

The new Obama ad also again calls for a windfall profits tax on oil companies and a $1,000 energy rebate for families.

"Barack Obama's latest attack ads shows his celebrity is matched only by his hypocrisy," said McCain spokesman Bounds. "After all it was Sen. Obama, not John McCain, who voted for the Bush-Cheney energy bill that was a sweetheart deal for oil companies. Also not mentioned is the $400,000 from big oil contributors that Barack Obama has already pocketed in this election."

In his speech, Obama noted that there was a bipartisan compromise on energy in the works.

Morgan Freeman injured in car wreck | U.S. | Reuters

TUPELO, Mississippi (Reuters) - Oscar-winning U.S. actor Morgan Freeman was hospitalized in serious condition on Monday after the car he was driving careened off a rural highway and rolled several times, authorities said.

Freeman, 71, was airlifted late on Sunday night to a Memphis, Tennessee, hospital, about 100 miles from the accident scene, which is near a home he keeps in Charleston, Mississippi.

"The vehicle went off the edge of the road and flipped several times," Mississippi Highway Patrol Sgt. Ben Williams said. No other car was involved in the accident.

From the direction Freeman was traveling, he appeared to be headed toward his home, Williams said.

Williams said it was "possible" that Freeman, who co-stars in the current blockbuster Batman movie the "Dark Knight," had fallen asleep at the wheel, but he added that authorities had ruled out alcohol as a factor in the wreck.

Freeman was conscious and talking to arriving officers afterward, Williams said, adding that no citation had been issued in the accident.

A spokeswoman at Regional Medical Center in Memphis said Freeman was in serious condition but gave no further details.

Both Freeman and a female passenger, identified as Demaris Meyer, were wearing seat belts, but the air bags did not deploy in the 1997 Nissan Maxima registered to Meyer, Williams said. He said he did not know the extent of her injuries.

Freeman was born in Memphis but spent much of his childhood in Mississippi and has opened a music club in the state.

Las Vegas Now | Poor Economy Delays Las Vegas Echelon Project

The slumping economy has taken a toll on a massive construction project that was supposed to help boost the Las Vegas economy. Work on the Echelon Hotel- Casino stopped Friday and won't start back up for at least a year.

The delay for Echelon is the first huge blow to the future of Las Vegas because of the slow economy. 800 construction workers were told to stop working because Echelon has been placed on hold.

"Clearly, as we look at it, we think in the next nine to 12 months -- we think in the next three to four quarters -- that we will be at a place where we can restart the project," said Boyd Gaming President and CEO Keith Smith.

SLIDESHOW: Poor Economy Delays Echelon Project

Smith made the public announcement at the release of their quarterly earnings report. He says this has nothing to do with Boyd Gaming as a company, but how the slow economy affected the minority partners on the project.

Morgan's Hotel Group committed to building two boutique hotels, but no one would agree to loan them the money for their part.

General Growth Properties was building the mall and could not sign high end stores to long term leases. Smith says that forced Boyd to delay Echelon, "It's interesting. When you turn the clock back a year, you could have never guessed that we would be in this position a year later."

Smith adds waiting about a year will hopefully loosen investment money. Without that money, the third wave of new jobs in Las Vegas will have to wait.

Echelon Delay Could Have Major Economic Impact

Encore opens in December, planning to hire 5,300 people. In 2009, Project CityCenter opens employing 12,000 people. But the 10,000 new jobs at Echelon set for 2010 will have to wait.

"We began to notify the workers and contractors this morning -- having conversations with them. We will be winding down with them as quickly as possible," said Smith.

Some work will continue for the next year, but only to make sure that the equipment stays secure on the construction site.

Smith believes that by 2011, when it's now scheduled to open, the economy should be in a full up-swing.

Boyd Gaming is in the process of renegotiating with Morgan's and General Growth Properties. Because they could not make financing, their contracts with Boyd Gaming are up in September.

General Growth Properties released earnings Thursday. In their call with investors they alluded to this problem. The company owns four other properties in Las Vegas.

The President and CEO says the Grand Canal Shoppes at the Venetian is doing very well. Stores are making an average of $1,200 a square foot. The Fashion Show Mall on the Strip is making about $1,100 a square foot. But the newly opened Shoppes at the Palazzo are struggling. Many of the stores have still not opened.

General Growth's newest property, the Shoppes at Summerlin Centre, has also been put on hold. By waiting a year to open, General Growth hopes to have 90-percent of the shoppes rented.

Profit at Sun Microsystems Falls 73 Percent - NYTimes.com

SAN FRANCISCO (AP) — Profit at Sun Microsystems, the computer server maker, declined 73 percent in the most recent quarter as slumping sales to big American companies and reorganization charges weighed on the server and software maker.

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Willie Walsh, the chief executive of British Airways.

The company, based in Santa Clara, Calif., also revealed plans Friday to expand its stock buyback program by $1 billion, a sign that Sun believes its shares, which have fallen by 50 percent over the last nine months, are undervalued and poised to rebound.

Wall Street did not share that optimism.

Sun’s shares sank 12.3 percent, to $9.32, on the company’s worse-than-expected guidance, which indicated that the pressures that hurt Sun in the April-June period, its fourth quarter, are affecting the current quarter.

Sun said before the market opened that it expected a “slight” sales decline in its first quarter, which ends in September, and indicated it most likely would not turn a profit. Analysts surveyed by Thomson Financial were expecting flat sales and a profit of 11 cents a share in this quarter.

The Goldman Sachs analysts David Bailey and Min Park said in a note to clients that Sun’s results supply “another piece of evidence that the problems the company faces have no short-term fixes, and we would continue to avoid the shares.”

Sun blamed weakness in the American economy, which has caused some of its biggest customers to cut spending, and the sale of fewer higher-end servers, which carry better profit margins. Sun faces intense competition in that market from I.B.M. and Hewlett-Packard.

Sun earned $88 million, or 11 cents a share, in the quarter, compared with $329 million, or 36 cents a share, in the period a year ago.

Excluding one-time charges, Sun earned 35 cents a share.

Sales were $3.78 billion, down from $3.84 billion last year.

Reuters Business Summary - washingtonpost.com

Small Florida bank is 8th U.S. failure this year

WASHINGTON (Reuters) - Bank regulators closed a small Florida-based bank on Friday, the eighth U.S. bank to fail this year under pressure from a weak economy and a credit crisis precipitated by falling home prices. The Federal Deposit Insurance Corp said First Priority Bank had $259 million in assets and $227 million in deposits and its failure will cost the federal fund that insures deposits an estimated $72 million.

S&P emails slammed mortgage debt products: report

CHICAGO (Reuters) - Analysts at Standard & Poor's Rating Services warned against mortgage-related debt products in internal e-mails that, in one case, called the complex financial deals "ridiculous," the Wall Street Journal reported in its weekend edition. The Journal cited a draft revision of a U.S. Securities and Exchange Commission report on bond-rating firms that was first released on July 8.

Yahoo board wins solid shareholder backing in vote

SAN JOSE, California (Reuters) - Yahoo Inc's (YHOO.O) board of directors won strong backing from shareholders at its annual meeting on Friday, with Jerry Yang, the company's embattled CEO, receiving 85 percent of the vote in his favor. Investors holding nearly 76 percent of Yahoo's 1.38 billion shares gave solid votes in favor of all nine current directors, in what represents an endorsement of their tough stance with Microsoft Corp (MSFT.O) in talks on a merger or partial sale.

Carrefour denies report it looking for new chief

PARIS (Reuters) - French supermarket chain Carrefour (CARR.PA) denied on Saturday that it had hired headhunters to seek a replacement for Jose Luis Duran, its chief executive. The Financial Times quoted an unnamed prominent businessman as saying he had been approached by a headhunter before a July 28 shareholder meeting called to approve a simplification in the management structure.

U.S. Vehicle Sales Fall 13.2% Amid High Gas Prices and Tight Credit - NYTimes.com

Vehicle sales in the United States fell last month to their lowest level in 16 years, as consumers continued to shun large trucks because of high gas prices, and tight credit kept less creditworthy customers off lots.

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A Ford plant in Oakville, Ontario. The automaker reported that sales in the United States fell 15 percent in July from a year ago.

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Sales were down 13.2 percent, at a time when the companies had expected to begin seeing an improvement.

Instead, the five largest automakers each reported sales declines on Friday. Sales fell 26.1 percent at General Motors, the largest car company, while Chrysler, which used to be the third-largest, reported a 28.8 percent decline and came within a few thousand sales of falling to sixth place. The Ford Motor Company posted a 14.7 percent decline.

Together, the three Detroit automakers accounted for just 42.7 percent of the vehicle market last month, selling about 150,000 fewer vehicles than they had a year earlier.

The declines in the United States market affected foreign automakers too.

Toyota Motor reported an 11.9 percent decline, while Honda, which builds fewer trucks than its rivals and was the only large automaker to report a sales increase for the first half of the year, said its July sales decreased 1.6 percent. Nissan’s sales rose 8.5 percent on strong demand for its small cars.

As recently as this spring, executives in Detroit forecast that auto sales would rebound in the second half of 2008, as consumers spent their federal rebate checks and overcame difficulties in the housing market. But the July sales figures suggest that will not be the case.

In fact, the industry’s annualized sales rate of 12.55 million was its lowest since April 1992, showing that the market is continuing to deteriorate.

Soaring borrowing costs for the automakers’ financing arms and other lenders have led to higher automotive loan rates and tighter credit standards, which have cut sharply into sales. G.M. said it is losing 10,000 sales a month that it used to get from customers with below-average credit ratings.

“In the next several months, or even the next year I would say, the unfolding credit situation that customers are facing in dealerships will take center stage,” said James D. Farley, Ford’s marketing chief. “A lot more creativity has to take place in the finance and insurance office to sell a car now.”

Meanwhile, leases are becoming significantly harder to obtain, with Chrysler no longer offering leases through its financing arm.

G.M. and Ford said on Friday that they will cut back on leasing but remain committed to that business.

Falling sales of sport utility vehicles and pickup trucks have caused resale values of those vehicles to plummet, and that has turned many leases into huge money losers for the automakers. Unprofitable leases led to write-downs of $2.1 billion for Ford and $716 million for G.M.’s financing arm, the General Motors Acceptance Corporation, which it partly owns. GMAC this week halted subsidies for leases in Canada.

“All the risk, all the liability and all the expense is being put onto the consumer with this move away from leasing,” said Rebecca Lindland, an analyst with the research firm Global Insight. “There may be unintended consequences to this move, and they may be unpleasantly surprised that consumers walk away and go someplace else.”

About 20 percent of customers lease vehicles, according to J. D. Power & Associates’ Power Information Network. Mark LaNeve, G.M.’s vice president for North American sales and marketing, said G.M. hoped to cut leasing so that it accounted for between 10 and 15 percent of its business.

“It’s a move that we have to make to reduce our risk in the marketplace,” said Mr. LaNeve. “If the industry can see its way through this, it’s going to give us much higher quality of sale and a much higher profit per vehicle.”

Chrysler said Friday that it would offer 72-month financing deals so that customers could buy a car with monthly payments similar to leases to ease the transition away from leasing.

Ford estimated that total light vehicle sales this year would be 13.7 million to 14.2 million, a considerable drop from the first half’s annualized rate of 15 million. In 2007, automakers sold more than 16.1 million vehicles in the United States.

Ford said that its car sales were up 7.8 percent last month, but that sales of S.U.V.’s, a segment that used to generate huge profits for all three Detroit automakers, plunged 54.4 percent. G.M. sold 18.9 percent fewer cars and 34.7 percent fewer light trucks.

At Toyota, car sales were roughly flat because of shortages of some models, while sales of pickup trucks and S.U.V.’s dropped 27 percent.

Summer is typically a strong season for the automakers, as they unload their remaining inventory from the old model year and begin selling new vehicles. But $4-a-gallon gas and a sluggish economy have kept many consumers who might normally be in the market for a new car away from dealerships.

Bloomberg.com: Worldwide

July 31 (Bloomberg) -- The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than investors had anticipated.

``We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. ``It's going to widen, it's going to deepen.''

The economy may weaken further as the temporary boost from tax rebates, which aided a pick-up in gross domestic product last quarter from the previous three months, fades. Stocks and the dollar dropped, Treasuries rallied, and traders reduced bets that the Federal Reserve will raise interest rates this year.

``This confirms the general picture of weakness, but it is surprising that GDP declined,'' said Martin Feldstein, who headed the National Bureau of Economic Research until June and serves on the group's recession-dating panel. He added that today's figures underscored his estimate that a downturn began in December or January. The last time the economy contracted was in 2001.

Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington, compared with the median projection of 2.3 percent in a Bloomberg News survey. The Labor Department said separately that more Americans filed claims for unemployment insurance last week than at any time in more than five years.

Financial Markets

Yields on benchmark 10-year Treasuries dropped to 3.97 percent at 10:47 a.m. in New York, from 4.05 percent late yesterday. The Standard & Poor's 500 Stock Index declined 0.1 percent to 1,283.1. The dollar fell 0.4 percent to $1.5632 per euro.

``As we look forward, we realize we have to grow out of a deeper hole than we thought,'' said Jack Ablin, who helps manage $55 billion as chief investment officer at Harris Private Bank in Chicago. ``We're going to operate at a kind of lackluster growth rate for many quarters to come.''

The smallest trade deficit in seven years, helped by the weakening U.S. dollar, prevented the economy from shrinking again last quarter. The trade gap narrowed to a $395.2 billion annual pace, adding 2.4 percentage points to growth, the most since 1980. Excluding trade, the economy would have contracted at a 0.5 percent pace, the second such decline in the last three quarters.

Exports may have also spurred a gain in the National Association of Purchasing Management-Chicago's business activity index. The group said today its measure increased to 50.8 this month from 49.6 in June. Fifty is the dividing line between growth and contraction.

2009 Recovery

``Exports are making the difference between a near recession, or mild recession, and a deep recession,'' Nariman Behravesh, chief economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm, said in an interview with Bloomberg Television. ``We don't really see a recovery until some time in the spring or summer'' of 2009 for the economy, he said.

Initial claims for unemployment insurance jumped by 44,000 to 448,000, the Labor Department said today. The department tomorrow may say payrolls declined by 75,000 in July, bringing total job losses so far this year to over 500,000.

Annual benchmark revisions showed consumer spending slowed more than previously estimated and the housing slump worsened. The economy shrank 0.2 percent in the fourth quarter last year, compared with a previously reported 0.6 percent gain.

First-quarter figures were also revised down to show a 0.9 pace of growth compared with a prior estimate of 1 percent.

Economists' Forecasts

The median forecast of economists for the second quarter GDP figures was based on 79 estimates in a Bloomberg News survey. Today's report is the first for the period and will be revised in August and September as more information becomes available.

Declines in growth in the revisions are reinforcing the recession signals sent by the loss of jobs so far this year. Still, a downturn is unlikely to be officially declared for months to come.

The NBER, the Cambridge, Massachusetts-based arbiter of economic cycles, defines a recession as a ``significant'' decrease in activity over a sustained period of time. The declines would be visible in GDP, payrolls, production, sales and incomes. The NBER usually declares a recession six to 18 months after it begins.

Bush would become the first president since Richard Nixon to have two recessions while in office, after the downturn from March to November of 2001.

The housing slump continued to hurt the economy, even as the decline moderated. Residential construction dropped at a 15.6 percent annual pace after dropping 25.1 percent in the first three months of the year. The decline detracted 0.6 percentage point from growth, the smallest reduction in more than two years.

Consumer Spending

Consumer spending last quarter grew at a 1.5 percent pace, less than anticipated, compared with a 0.9 percent gain in the January-to-March period that was the smallest in 13 years.

Most economists are forecasting the lift from the rebates will fade in the second half of the year. Retail sales rose 0.1 percent in June, less than forecast, indicating consumers may already have started to retrench at the end of the quarter.

Shoppers are hunting for bargains to stretch the buying power of the stimulus checks. Wal-Mart Stores Inc., the largest retailer, said same-store sales in June rose 5.8 percent, the biggest increase in four years, as costumers spent the rebate money on discounted gasoline and food.

`Struggling' Americans

``At times like now, when the average American is struggling with the cost of everyday needs, price matters,'' Eduardo Castro- Wright, chief executive officer of Wal-Mart's U.S. stores division, told shareholders last month.

The price index in today's report rose at an annual rate of 1.1 percent, the smallest increase since 1998 and down from 2.6 percent in the first quarter.

Investors are betting the Fed will keep the benchmark rate unchanged at 2 percent at its Aug. 5 meeting, according to federal funds futures contracts. Odds of an increase by year-end fell to about 60 percent today from 69 percent yesterday, futures prices showed.

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Bloomberg.com: U.S.

July 31 (Bloomberg) -- Exxon Mobil Corp., the world's biggest oil company, posted a smaller increase in second-quarter profit than analysts estimated after production slid the most in at least a decade, sending its shares lower.

Oil and gas output tumbled 7.8 percent after Venezuela seized assets, Nigerian workers went on strike and governments from Angola to Russia kept more crude under contracts that give them a bigger share when prices rise. Crude climbed above $140 a barrel for the first time, allowing Exxon Mobil to achieve the highest profit ever for a U.S. company without one-time gains.

Net income rose to $11.7 billion, or $2.22 a share, from $10.3 billion, or $1.83, a year earlier, the Irving, Texas-based company said today in a statement. Excluding costs related to the Valdez oil-spill lawsuit, per-share profit was 26 cents below the average of 12 analyst estimates compiled by Bloomberg.

``They are not growing,'' said Philip Weiss, an analyst at Argus Research in New York who rates Exxon Mobil shares ``buy'' and owns none. ``Production is becoming more and more of a concern. For these guys, access to reserves is a very big issue.''

Chief Executive Officer Rex Tillerson, 56, is spending $52 million a day to search for new fields after reserves fell in 2007 by the most in at least a decade. Exxon Mobil plans to start 12 projects this year that will pump the equivalent of 411,000 barrels of crude a day, more than the daily output of Prudhoe Bay, the largest U.S. oil field.

Refining Profit Falls

Record energy prices inflated costs for Exxon Mobil plants that process crude and natural gas into fuels and chemicals. Profits from refining and chemicals fell 54 percent and 32 percent, respectively. U.S. gasoline futures rose at less than half the pace of crude during the quarter.

Exxon Mobil fell $2.68, or 3.2 percent, to $81.70 at 12:02 p.m. in New York Stock Exchange composite trading. The shortfall in earnings per share relative to analyst estimates was the company's biggest in at least three years. The stock has dropped 13 percent this year.

Royal Dutch Shell Plc, Europe's largest oil producer, today reported a 33 percent gain in second-quarter profit to $11.6 billion. London-based BP Plc said earlier this week that its net income climbed 28 percent to $9.47 billion. Shell's output fell 1.6 percent, and BP's was little changed from a year earlier.

Chevron Corp., the second-biggest U.S. oil company, and France's Total SA are scheduled to report earnings tomorrow. ConocoPhillips, the third-largest U.S. petroleum producer, said last week that its profit jumped to a record $5.44 billion.

Production Falls

Exxon Mobil pumped the equivalent of 3.8 million barrels of oil a day, its lowest average since the third quarter of 2005. Crude production declined in every region where the company has wells, and gas output fell everywhere except Russia, Europe and Africa. Production-sharing contracts with price triggers took away 160,000 barrels of daily oil equivalent, company spokesman Henry Hubble told investors on a conference call.

Profit from oil and gas sales climbed 68 percent to $10 billion.

``If oil prices are going up $20 and $30 a barrel a quarter like they have been, it hides a lot of flaws,'' said Brian Gibbons, an analyst at New York-based CreditSights Inc. ``The question on everyone's mind is, how do these guys expect to grow production given the restrictions on access to reserves?''

Tillerson, who succeeded Lee Raymond as CEO in January 2006, is facing increasing barriers to oil and gas exploration in Russia, Alaska and the South China Sea as governments limit access or raise the costs of tapping natural resources.

Price Impact

New York oil futures, which had never traded as high as $112 before the second quarter, surged to a record $143.67 in June. Each $1 gain in the price of oil boosts Exxon Mobil's net income by 11 cents a share, according to William Featherston, an analyst at UBS Securities LLC.

Natural gas rose even faster than oil in this year's first half, and the average second-quarter price jumped 50 percent to $11.47 per million British thermal units. Exxon Mobil's output is about 60 percent crude and 40 percent gas. Oil and gas sales account for more than 80 percent of profit.

Exxon said its second-quarter revenue jumped 40 percent to $138.1 billion. The company said it had $290 million in after- tax costs related to the June ruling by the U.S. Supreme Court that reduced a punitive damage award for the 1989 Valdez spill from $2.5 billion.

Exxon Mobil generates about $27 of cash flow from each barrel of production, 21 percent higher than the industry average, Gibbons said. The company was the most efficient oil and gas producer among its peers, yielding almost $3 of cash flow for every $1 spent, he said.

To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.

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Mortgage rates drop as commodities ease - Jul. 31, 2008

NEW YORK (CNNMoney.com) -- Mortgage rates fell slightly this week according to a weekly report released Wednesday, as lower oil prices briefly ease fears of price inflation.

The Primary Mortgage Market Survey from mortgage finance company Freddie Mac said that rates of 30-year fixed-rate mortgages (FRMs) averaged 6.52% for the week ended July 31 with an average 0.7 point discount, down from an average 6.63% last week, and down from an average of 6.68% recorded during the same week last year.

The 15-year FRM averaged 6.07% this week with an average of 0.6 point, down from 6.18% last week, and down from 6.32% last year.

A point, or "discount point," can be purchased at the time of closing to decrease the mortgage rate. Each point costs 1% of the loan amount and each point that a borrower purchases lowers the the loan interest rate.

Five-year adjustable-rate mortgages (ARMs) averaged 6.07% this week, with an average 0.6 point, down from last week when it averaged 6.16%. A year ago, the 5-year ARM averaged 6.29%.

One-year ARMs averaged 5.27% this week with an average 0.6 point, down from last week when it was 5.49%. At this time last year, the 1-year ARM averaged 5.59%.

"Mortgage rates moved lower this week as a drop in commodity prices eased market concerns over inflation pressures," said Freddie Mac chief economist Frank Nothaft in a statement.

The price of gasoline at the pump continued to fall below $4 a gallon as crude oil prices have fallen nearly $23 a barrel over the past several weeks from its peak of $147.27 on July 11.

"Yes, there is some influence in hope for less inflation pressure, but we'd need a more extended period of these softening prices" to see a significant decline, said Keith Gumbinger, vice president of HSHAssociates.com, an online publisher of consumer loan information. 

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Jobless claims surge to 5-year high - Jul. 31, 2008

NEW YORK (CNNMoney.com) -- Jobless claims rose to their highest level in five years last week, the latest evidence that Americans are still having a hard time finding a job.

The Department of Labor reported Thursday initial filings for state jobless benefits increased by a seasonally adjusted 44,000 to 448,000 in the week ended July 26.

Unemployment claims rose much more than had been expected. The consensus estimate of economists surveyed by Briefing.com was for claims to come in at 395,000.

Last week marked the highest total for weekly jobless claims since the week ending April 19, 2003. It was the highest week-to-week increase in jobless claims since the week ending September 10, 2005.

That rise sent the four-week moving average of new jobless claims up 11,000 to 393,000.

The weekly jobless claims report also showed continued unemployment insurance claims from those already receiving benefits rose in the week ended July 19 to 3.28 million, up 185,000 from the previous week.

The four-week moving average for continued claims rose by 42,750 to 3.17 million.

Not quite as bad as it seems

The rise in new unemployment claims was sharp, but this tends to be a choppy time for claims. On a non-seasonally adjusted basis, initial claims actually fell for the second straight week.

"It's summer, when initial claims are traditionally very volatile," said Adam York, an economist with Wachovia.

Furthermore, President Bush signed a bill last month that extends unemployment benefits to as much as 13 weeks for some. In an effort to notify hundreds of thousands of Americans about the extension, the Labor Department discovered many were eligible for initial unemployment claims - not just an extension of benefits.

The Labor Department said some of these people had intervening wages such as a temporary summer job that qualified them to reapply for jobless insurance benefits. As a result, the government said many valid claimants who did not previously know they were eligible applied for new benefits.

That makes the number a bit difficult to compare to previous weeks.

"Nevertheless, these numbers are clearly very weak," York added. "We're not in a situation that we can't dig ourselves out of, but we're not going to rebound very quickly either."

The latest claims reading comes on the heels of a report out Wednesday that showed the private sector unexpectedly added 9,000 jobs in July. The ADP employment report had been forecast to show a large decline.

Both the weekly jobless claims report and the ADP payrolls survey come ahead of the more closely watched employment report from the Labor Department, which is due out Friday. The report is expected to show that employers cut jobs for a seventh straight month. The unemployment rate is expected to rise to 5.6%. 

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Altria profit edges estimates, cigarette volume down - Forbes.com

CHICAGO (Reuters) - Altria Group (nyse: MO - news - people ) Inc posted a second-quarter profit Thursday that slightly beat Wall Street estimates, helped by higher prices, but the number of cigarettes shipped by its Philip Morris USA unit fell more than some analysts expected.

The pace of the shipment decline also accelerated from the first quarter, the opposite of what rival Reynolds American (nyse: RAI - news - people ) Inc reported on Wednesday, and Altria's stock lost more than 5 percent.

"Price increases accelerated the volume decline seen in the first quarter," Gregg Warren, an analyst at Morningstar said.

Altria shares also may have been pressured because the House passed a bill that would give the Food and Drug Administration broad authority to regulate cigarettes and other forms of tobacco, Warren said.

But the White House said advisers would recommend the president veto the bill, and Philip Morris USA has actually supported the legislation.

The parent of Marlboro cigarette maker Philip Morris USA said profit from continuing operations was 45 cents a share in the second quarter, compared with 34 cents a share a year earlier.

Excluding one-time items, earnings were 46 cents a share, compared with the 45-cent average analyst estimate compiled by Reuters Estimates.

Altria spun off the Philip Morris International tobacco business at the end of March, so net income fell to $930 million, or 45 cents a share, from $2.22 billion, or $1.05 a share, a year earlier.

The company also stood by its full-year profit forecast, with price increases and lower expenses helping to boost earnings from continuing operations.

That forecast calls for earnings from continuing operations of $1.63 to $1.67 a share, while the average analyst estimate is $1.67 a share, according to Reuters Estimates.

Revenue rose 4 percent to $5.05 billion.

Revenue, excluding excise taxes, was $4.18 billion, compared with the average analyst estimate of $4.03 billion compiled by Reuters Estimates.

Philip Morris USA's cigarette market share rose to 51 percent from 50.5 percent a year earlier, with the top-selling Marlboro brand commanding 41.8 percent of the U.S. market, up from 41 percent a year earlier.

The company shipped 43.6 billion cigarettes in the quarter, down 4.5 percent from a year earlier. Shipment volume fell only 1.2 percent in the first quarter.

That decline was steeper than some analysts had expected.

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Capcom: Monster Hunter Freedom 2G Boosts Capcom

Thanks largely to strong sales of Monster Hunter Freedom 2G on the PSP, Capcom said it had its best fiscal first quarter since it began reporting quarterly.

The company saw 16,352 million yen ($153.2 million) in net sales for its fiscal first quarter, an increase of 14.5 percent over the same period last year. The company's overall revenues took a 43.5 percent jump to 2,978 yen ($27.6 million), and profits were up 60.1% to 4,024 million yen ($37.2 million).

Monster Hunter Freedom 2G sales have been "skyrocketing," according to Capcom, since its March 27, 2008 release. The company also said the game broke Japanese PSP sales records, with 2 million units sold.

On the downside, the company's arcade business is struggling, though the impact to Capcom is mitigated by its home software performance.

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Nintendo Q109 Results: The GBA And GameCube...Still...Function!

The Game Boy Advance and GameCube. Relics of Nintendo's early 21st century efforts. Purple, plastic-looking consoles that, for all their strengths, were the company's flagship devices during the "dark days". With the Wii and DS on the scene nowadays, and printing all kinds of cash money, they're dead machines, yes? Gone, no further need for them, thanks for the memories, right? WRONG. They LIVE.

Nintendo's quarterly earnings show that, while they're hardly raking in the big bucks, both consoles are still selling units and still making money well into 2008. While nobody in Japan, Europe, Asia or Australia bought a new GameCube between April and June, somewhere, somehow, 40,000 Americans did. As for the GBA, well, none were sold in the US, but globally, 180,000 of them found new homes. 180,000! If you ever wonder why Nintendo have never publicly proclaimed the death of the little handheld, that's probably why.

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Capcom Q109 Results: Capcom Sales Up, Put Rough Window On SFIV Release

Capcom released its financial statement today, revealing a 14.5 percent increase in net sales and a 110.8 percent increase in net income with compared to Q1 last year. According to the release, the weaker yen meant a foreign exchange gain of ¥840 million — "a significant boost to ordinary income." Net sales for home console games were up 31.5 percent in comparison to the previous year's Q1. Game sales were powered by the Monster Hunter Freedom 2ndG phenomenon, which has shipped 2.48 million units as of July 2008 in Japan and Asia.

In the next quarter of this financial year, Capcom has no plans to launch any major titles. According to insiders however, Capcom said in a conference call today that it did plan to launch Street Fighter IV on Xbox 360, PS3 and PC in the third quarter of this financial year, which would make it a holiday release (this Thanksgiving in the US?). Nothing has been confirmed, but that would make sense as Resident Evil 5 launches in March 2009.

Capcom did provide its sales target for upcoming titles. Resident Evil 5 is expected to move 2.3 units, SFIV is expected to move 1.7 million, Bionic Commando 1.5 million units and Dead Rising Chop Till You Drop 0.5 million units.

Capcom also reports that arcade operations were up 6.5 percent, while arcade game sales were up 47 percent. However, as Capcom states: "Arcades in shopping centers had a particularly difficult time because of the rising popularity games for home video games and escalating gasoline price." Imagine that means the Japanese suburban arcade scene isn't exactly hopping. Between April and June 2008, one Capcom arcade was opened and zero were closed. The arcade division was in the red due to heavy development costs and the lack of new releases. "Card game sales to arcade game machines are running somewhat above plan," Capcom added.

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Bloomberg.com: U.S.

July 29 (Bloomberg) -- Starbucks Corp., the world's largest chain of coffee shops, will cut another 1,000 jobs and eliminate the chief operating officer position as the company seeks to reverse slumping sales.

Operating chief Martin Coles will take over as president of Starbucks Coffee International, the Seattle-based company said today in a statement. Jim Alling, the previous international chief, is leaving the company.

Starbucks founder Howard Schultz, 55, resumed the position of chief executive officer in January to revitalize the chain's cafes after U.S. customer visits declined. Earlier this month, he announced plans to close 600 stores in the U.S. and eliminate as many as 12,000 positions, or 7 percent of the workforce.

``They're just streamlining a lot of their overhead business units at this point,'' said Sharon Zackfia, an analyst at William Blair & Co. in Chicago. She recommends investors buy the shares.

About 550 of the latest jobs being eliminated are non- store positions, spokeswoman Bridget Baker said. The company employed about 172,000 as of last September

Starbucks climbed 76 cents, or 5.3 percent, to $14.99 at 4 p.m. in Nasdaq Stock Market composite trading. The shares have dropped 18 percent since Schultz took over again.

Australia Cuts

Earlier today, the coffee-shop chain said it will shut three-fourths of its 84 stores in Australia within the next five days, backing away from a market it entered eight years ago.

Starbucks probably will concentrate more of its growth in China and Japan, Zackfia said. Mexico and South America have also been ``very good markets,'' she said.

``They've just started to scratch the surface in Brazil, which has a lot of people, and a lot of people drinking coffee,'' Zackfia said.

Schultz has called the company's problems ``self- induced,'' and vowed to introduce more innovative products and clean up aging stores. Since January, Starbucks has introduced a milder blend of coffee, new drinks and consumer-loyalty cards, and is tinkering with breakfast-sandwich recipes so their smell doesn't overwhelm coffee aromas.

Management Appointments

Starbucks also named Michelle Gass to oversee marketing, food and beverage; Dorothy Kim to run global strategy; and Peter Gibbons to head the company's supply-chain operations. Vivek Varma will manage communications.

Starbucks opened its first store in 1971 in Seattle's Pike Place Market as a place to sell beans and coffee-making equipment. The company was named for the coffee-drinking first mate in the novel ``Moby Dick.''

Starbucks reports third-quarter financial results tomorrow.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Vonage names former AT&T executive as new CEO

NEW YORK (Associated Press) - Struggling with tough competition, Internet telephony provider Vonage Holdings Corp. has turned to a former marketing executive from AT&T Inc. to polish up the company's image as its new CEO.

The Holmdel-based company said Tuesday that its board of directors has selected Marc Lefar as the company's new chief executive.

He replaces company founder Jeffrey Citron, who has served as interim CEO since April 2007, when Michael Snyder stepped down as the company's legal challenges and financial losses mounted.

Lefar served as chief marketing officer of Cingular Wireless, now AT&T Mobility, for more than four years, and later founded a technology and media consultancy called Marketing Insights.

Vonage is one of the leading providers of Voice over Internet Protocol, or VoIP, services, which allows people to make cheap or free calls over a broadband Internet connection. With 2.6 million customers, Vonage is the leading independent Internet phone service, but its once rapid growth has lost steam as cable companies like Comcast Corp. and Time Warner Inc., have rolled out competing services.

Due to high marketing costs and patent-infringement lawsuits from phone companies, Vonage has lost more than $967 million over the past five years.

Lefar said in a statement that he will focus on improving the customer experience, and that "meaningful, intuitive features will accelerate growth and improve loyalty."

Vonage shares gained 3 cents to $1.45 in after-hours trading Tuesday. They had closed the regular trading session down 4 cents, or 2.7 percent, at $1.42. News of the appointment of a permanent CEO leaked last week. 

Surgical Errors Cost Almost $1.5B a Year - washingtonpost.com

MONDAY, July 28 (HealthDay News) -- Preventing medical errors that occur during or after surgery could save lives and almost $1.5 billion a year, according to U.S. Agency for Healthcare Research and Quality (AHRQ) study.

The researchers analyzed data on more than 161,000 patients in employer-based health plans who underwent surgery between 2001 and 2002.

The study found that insurers paid an additional $28,218 (52 percent more) and an additional $19,480 (48 percent more) for each surgery patient who suffered acute respiratory failure or post-operative infections, respectively, compared to patients who didn't suffer those complications.

Among the other findings:

Nursing care associated with medical errors, including pressure ulcers and hip fractures, cost an additional $12,196 (33 percent more) per patient.Metabolic problems, such as kidney failure or uncontrolled blood sugar, linked to medical errors cost an additional $11,797 (32 percent more) per patient.Blood clots or other vascular or pulmonary problems associated with medical errors cost an additional $7,838 (25 percent more) per patient.Wound opening tied to medical errors cost an additional $1,426 (6 percent more) per patient.

In addition, the study found that one out of every 10 patients who died within 90 days of surgery did so due to a preventable error, and one-third of the deaths occurred after the initial hospital discharge.

The study was published in the July 28 issue of the journalHealth Services Research.

"Like the physical and emotional harm caused by medical errors, the financial consequences don't stop at the hospital door. Eliminating medical errors and their after-effects must continue to be top priority for our health care system," AHRQ director Dr. Carolyn M. Clancy said in an agency news release.

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For parents, a phone dilemma -- chicagotribune.com

NEW YORK — It's a signature parenting dilemma of the wireless age: Should kids have cell phones?

It pits parents' desire to keep tabs on their offspring against the feeling that it's wrong for youngsters to spend time chatting and texting.

Now there's further ammunition: The warning last week by the head of a prominent cancer research institute to his faculty and staff. Limit cell phone use, he said, because of the possible cancer risk — especially when it comes to children.

The warning from Dr. Ronald Herberman, director of the University of Pittsburgh Cancer Institute, was based on early, unpublished data and came despite studies that have not found a link between increased tumors and cell phone use. But it's struck a nerve among parents.

"Now we hear about this possible medical risk," said Marybeth Hicks, mother of four. "I couldn't possibly know if it's real or not."

It's hard to gauge but in 2004, 21 percent of those ages 8 to 10 and 36 percent of the 11 to 14 group had phones, according to the Kaiser Family Foundation.

Should the latest medical news cause huge concern? "If you've got good reasons for them to have it, I'd go ahead," said Frank Barnes, a professor who chaired a recent report on the subject. However, he added, "they've probably got other things they should be doing."

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Industry says granite countertops are safe to use

MONDAY JULY 28, 2008 (foodconsumer.org) -- The Marble Institute of America on Friday responded to the studies by Rice University physics professor W.J. Llope saying that granite countertops pose no significant health risk.

Earlier, Llope was cited by Houston Chronicle as finding that some granite countertops generate gamma radiation and radon gas at a level that is considered dangerous by the U.S. government.

In its statement, the MIA categorized the studies as junk science and cited new U.S. Environmental Protection Agency (EPA) statements to say that radon gas and radiation released from granite countertops do not pose a risk.

The MIA represents producers and quarriers, fabricators, installers, distributors and contractors worldwide in the natural dimension stone industry.

"While natural minerals such as granite may occasionally emit radon gas, the levels of radon attributable to such sources are not typically high," the EPA statement was quoted by MIA as saying.

"EPA believes the principal source of radon in homes is soil gas that is drawn indoors through a natural suction process.”

In an EPA statement cited by the industrial organization, the EPA acknowledges that the "it is possible for any granite sample to contain varying concentrations of uranium that can produce radon gas.  Some granite used in countertops may contribute variably to indoor radon levels.”

But the government agency goes on to say that it "has no reliable data to conclude that types of granite used in countertops are significantly increasing indoor radon levels."

The MIA also quoted a statement by the EPA to discount worry about the radiation from granite countertops. "Construction materials such as concrete, cinder blocks, bricks, and granite contain small amounts of radioactive materials that are found naturally in the materials used to make them," meaning that radiation is not unique with granite countertops.

"Every time researchers have applied rigorous scientific standards to testing, the results have found that granite countertops pose no risk," said Jim Hogan, president of the MIA.

"Repeated studies have found that granite is safe. Unfortunately, some recent junk science being reported as fact only serves to panic the public, not inform it. Our goal is to end this fear mongering by facilitating the creation of a real scientific standard for testing granite countertops."

Llope tested 55 stones of 25 varieties of granite stones purchased from local dealers and found some homeowners would be exposed to 100 millirems of radiation in just a few months, exceeding the annual exposure limit set by the Department of Energy for visitors to nuclear labs.

Llope did not publish the names of the granite countertops that he found are most dangerous, but he was cited as saying that the highly radioactive varieties include striated granites from Brazil and Namibia.

In a document published on his website, Llope said there is no safe threshold for radiation and the general guideline is that each rem of radiation would cause cancer in 4 people in a population of 10,000.

Some granite countertops he tested released one rem of radiation in just 250 hours or 10 days.

But the MIA cited two recent studies by researchers at the University of Akron and Consumer Reports as finding no grounds to fear granite countertops because radon gas did not seem to be an issue.

It is not immediately clear if these two studies tested radiation from granite countertops.

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