Economy-Finance

The past and future decade in business at a glance

December 27th, 2009

A look at the decade that was and the decade to come, by industry:

BANKING

THE PAST DECADE: The nation’s big banks swaggered into the decade as owners of the world. They leave it humbled and, in some cases, wards of the state.

After receiving billions in federal bailout money last year, the banking industry has partly recovered from the worst economic downturn since the Great Depression. Some banks, including Goldman Sachs Group, Morgan Stanley and JPMorgan Chase & Co., have repaid their bailout funds and are making big money again trading stocks, bonds and other risky securities.

Other large institutions remain hobbled. American International Group Inc. gave the government an 80 percent ownership stake in return for a $182.5 billion taxpayer rescue aimed at keeping the giant insurer from collapsing during the height of the crisis.

It’s a stark contrast from how the banking industry began the decade. In 1999, the Depression-era law that separated commercial and investment banks was repealed, ushering in a period of unprecedented banking profits and record-high executive bonuses.

THE NEXT DECADE: The question now is whether banks will return to their high-flying ways after they fully regain their health. The Obama administration wants sweeping financial reforms to curb excessive risk-taking. But the banking industry is fighting to scale back the overhaul out of fear that it will cut into profits.

A major flash point is the effort to regulate over-the-counter derivatives, the complex, often highly leveraged instruments that were blamed for accelerating last year’s meltdown. The government wants legislation requiring derivative trades to go through a clearinghouse. Today, they’re traded directly between buyers and sellers, an arrangement that earns billions each year for banks.

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REAL ESTATE

THE PAST DECADE: The real estate boom and bust were the biggest since the Great Depression.

With interest rates at near-historic lows, home sales this decade skyrocketed, propelling homeownership rates and new construction to all-time highs. Lending standards sank through the floor. People bought homes with little or no down payment, and in many cases without proof of income or assets. Homeowners refinanced and raided their equity.

Home prices soared 88 percent between the first quarter of 2000 and the peak in the first quarter of 2006.

Then, the crash.

Homes languished unsold and millions of Americans went into foreclosure. Housing construction tumbled to the lowest level in 50 years. Home values plunged, eviscerating $4 trillion in home equity. By mid-2009, home prices were down 30 percent — even further in parts of California, Nevada, Florida and other markets where prices soared highest.

THE NEXT DECADE: It could be another five or 10 years before homes in the hardest-hit markets regain the value they had at the height of the housing boom.

What else will shape the housing market in the next decade? One of the biggest questions is how the government will extricate itself from control of Fannie Mae and Freddie Mac. The two companies, which were on the brink of failure in the fall of 2008 and seized by the government, own or guarantee about half of all home mortgages.

Another wild card is the Federal Housing Administration, which now insures one in four new loans. Rising foreclosures have eroded the agency’s financial cushion below the safety line. Will it need a taxpayer bailout?

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RETAIL

THE PAST DECADE: For stores and consumers, a long feast was punctuated by a stark famine.

For most of the decade, retail growth was spurred by consumers who had easy credit from home equity or plastic. The free spending encouraged retailers to create new brand offshoots to cater to every shopper’s whim.

Online shopping exploded, from $24 billion in 2000 to what’s expected to be $157 billion by year-end.

Department stores were big losers. That business has consolidated further, leaving more power in the hands of a few players such as Macy’s and J.C. Penney.

THE NEXT DECADE: Consumers’ hard pullback in spending triggered by the housing meltdown and ensuing recession and credit squeeze is remaking the reeling retail industry.

Lines between pharmacy, clothing, food and toy retailers, which have already started to blur, will get even fuzzier. Toys R Us and others are expanding into detergent and other necessities to keep shoppers in stores longer.

Stores will get smaller as merchants rely increasingly on Web business and get choosier about what they carry on their shelves.

While experts don’t see stores’ online sales topping their land-based business, consumers will be able to shop anywhere — even from their refrigerators, says John Long, retail strategist at Kurt Salmon Associates.

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HEALTH

THE PAST DECADE: Health care spending as a percentage of gross domestic product rose from 13.8 percent in 2000 to a projected 17.6 percent in 2009. That adds up to $2.5 trillion and includes everything from insurance payments to out-of-pocket costs for consumers. Medicare beneficiaries finally got prescription drug coverage mid-decade bringing more revenue to drug companies and insurers.

THE DECADE AHEAD: Health spending’s share of GDP is projected to rise to 20.3 percent, or $4.35 trillion, by 2018.

The health care overhaul effort advancing in Congress is expected to add both customers and financial pressure for insurers. The goal is to cover the uninsured and rein in ballooning costs. But analysts say proposed taxes on insurers, weak penalties for those who don’t buy policies and the mandate that insurers cover all comers will lead to higher prices and do little to corral rising medical costs because many healthy people will risk going without coverage. They predict another reform push in about five years focusing on controlling expenses.

Pharmaceutical companies increasingly will turn their research and strategic partnerships and acquisition efforts toward biotechnology drugs and vaccines to generate high-priced medicines. The remarkable string of blockbuster drugs developed since the 1990s is set to go off patent. That includes cholesterol-lowering drug Lipitor and the blood thinner Plavix. Analysts say the most promising innovations will continue to be biotech drugs, which can be tailored to increasingly specific patient groups.

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MANUFACTURING

THE PAST DECADE: U.S. manufacturing has taken the brunt of the decade’s two recessions, losing more than 5.6 million factory jobs. But in between the downturns, manufacturers generated big profits in their remaining areas of strength — passenger jets, semiconductors, backhoes, cans of beer and pharmaceuticals.

THE DECADE AHEAD: A very long recovery lies ahead. Some manufacturers, like automakers, won’t ever return to their former scale in the U.S. Others face stiffer competition from countries like China, which aims to challenge U.S. dominance in the construction of jumbo jets. Big economic issues like free trade agreements, currency prices and corporate taxes could affect whether manufacturing grows or not.

Manufacturers will put more computers to work, and fewer humans. And they’ll squeeze more out of their remaining employees, who will need more than a high school degree to get work in manufacturing. As a result, it’s likely manufacturing faces a continued evaporation of jobs.

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AUTOS

THE PAST DECADE: A record 17.3 million vehicles were sold in the U.S. in 2000, and General Motors, Ford and Chrysler controlled 67 percent of that market. But as Detroit focused on profitable SUVs, Japanese automakers and new players such as Hyundai grabbed buyers with newer and better cars. Gas prices accelerated the SUV’s decline, and by 2008, the Detroit Three’s market share dropped to 48 percent and Toyota outsold GM worldwide. Faced with staggering debt and a credit crisis, GM and Chrysler went into bankruptcy in 2009.

THE DECADE AHEAD: China is passing the U.S. as the largest auto market. Automakers will also look to India, Russia and Brazil to expand sales. Chinese automakers are expected to start selling cars in the U.S.

The U.S. will require significant improvements in fuel economy, and automakers are racing to develop electric, hybrid, clean diesel and hydrogen-powered cars. Technology also will make cars safer.

The wrenching cost cuts of 2000s will help automakers turn profits and increase sales in the next decade, according to Erich Merkle, president of the consulting firm autoconomy.com. But he also predicts volatility in the market because of inflation and gas prices.

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ENERGY

THE PAST DECADE: A barrel of oil cost $20 as the decade began. It peaked at $147 last year, as a new class of investors pumped money into futures contracts and producers struggled to keep up with energy appetites in the developing world. Americans paid more than $4 for a gallon of gasoline in the summer of 2008. Then oil and gas prices tumbled as the global recession squelched demand.

Natural gas producers had unlocked massive new supplies by decade’s end, building record U.S. reserves that could last for a century.

THE DECADE AHEAD: By 2019, many cars may get 50 miles per gallon or better. Improved gas mileage, rising prices for gasoline and more energy-efficient homes are seen keeping demand for oil and natural gas at moderate levels in the U.S.

Even so, nearly half of the nation’s electricity still will come from coal even with more wind and solar energy sources.

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AIRLINES

THE PAST DECADE: The 2000s was when the Internet caught up with airlines. Consumers started using online travel sites to compare ticket prices, making it easier to find the cheapest seats.

Demand dropped after Sept. 11, as terror fears and recession kept travelers away. By 2005, four of the nation’s seven largest airlines were operating under bankruptcy protection. They emerged, only to get hammered by record fuel prices and another recession in 2008.

THE DECADE AHEAD: In the next decade, flights may get shorter. Airlines can’t bend the laws of physics. But satellite navigation could let them fly straight from city to city instead of along routes determined by the location of radio beacons.

Shorter flights means lower fuel bills. Airlines need the help.

“We do have an industry … that is hanging on by its fingernails,” says Bill Swelbar, who studies airline finance at the Massachusetts Institute of Technology’s International Center for Air Transportation.

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MEDIA/TECHNOLOGY

THE PAST DECADE: Here’s a cruel irony: When Web startups flamed out in the dot-com bust that began this decade, established media empires may have been the biggest losers.

That Internet meltdown seemed to validate traditional publishers and broadcasters, encouraging them to cling to their ways as brash newcomers got their comeuppance. It seemed conceivable that fledgling sites like Craigslist and Google might not last.

Newspapers and magazines are the endangered species today. Vast amounts of their revenue are siphoned by Internet alternatives such as Craigslist’s classified ad service and Google’s information smorgasbord and marketing magic.

Broadcasters are hurting too, facing challenges they didn’t envision at the start of the decade. The advent of YouTube (now part of Google) and the proliferation of digital video recorders let anyone play filmmaker.

THE DECADE AHEAD: To survive the next decade, media companies will have to think more like Netflix Inc.

Netflix built its business this decade by taking DVD-rental requests online and mailing discs to subscribers. If it wanted to maximize short-term profits, Netflix would have just stuck to DVD rentals. But Netflix has invested heavily in the technology and rights to stream movies and TV shows over the Internet. It’s already preparing for the day that DVDs seem as antiquated as VCRs — and, eventually, newspapers in print.

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Even as economy mends, a jobless decade may loom

December 27th, 2009

WASHINGTON— Call it the Terrible Teens.

The decade ahead could be a brutal one for America’s unemployed — and for people with jobs hoping for pay raises.

At best, it could take until the middle of the decade for the nation to generate enough jobs to drive down the unemployment rate to a normal 5 or 6 percent and keep it there. At worst, that won’t happen until much later — perhaps not until the next decade.

The deepest and most enduring recession since the 1930s has battered America’s work force.

The unemployed number 15.4 million. The jobless rate is 10 percent. More than 7 million jobs have vanished. People out of work at least six months number a record 5.9 million. And household income, adjusted for inflation, has shrunk in the past decade.

Most economists say it could take at least until 2015 for the unemployment rate to drop down to a historically more normal 5.5 percent. And with the job market likely to stay weak, some also foresee another decade of wage stagnation.

Even though the economy will likely keep growing, the pace is expected to be plodding. That will make employers reluctant to hire. Further contributing to high unemployment is the likelihood of more people competing for jobs, baby boomers delaying retirement and interest rates edging higher.

All this would come after a decade that created relatively few jobs: a net total of just 464,000. By contrast, 21.7 million new jobs were generated between 1989 and 1999.

Economist David Levy, chairman of the Jerome Levy Forecasting Center, says the country faces a new era of chronically high unemployment, averaging 8 percent or more over the next decade.

The “New Abnormal,” he calls it.

Levy thinks the New Abnormal also means average pay will dwindle, along with consumer prices. That would make it harder for households to pay down debt, he warns.

By the Federal Reserve’s reckoning, the jobless rate could remain as high as 7.6 percent in 2012. And it would take two or three years after that for the job market to return to normal, the Fed says.

It’s possible jobs won’t return to pre-recession levels at any point over the next 10 years, Levy says.

That’s mainly because the economy’s recovery, sluggish by historical standards, isn’t expected to regain its vigor over the next few years. As a result, companies will be in no rush to ramp up hiring.

Other analysts think the economy will recover the jobs wiped out by the recession by 2013 or 2014 but that the unemployment rate will stay high. They note that the healing economy will cause more people to stream back into the labor force, vying for too-few jobs.

In addition, baby boomers whose retirement accounts have shrunk could put off retiring and stay in the work force longer. That would leave fewer positions available for the unemployed.

Other contributing forces — businesses squeezing more work from employees they still have and relying more on part-time and overseas help — have intensified. And record-high federal budget deficits and the threat of inflation could drive up interest rates, which could hobble growth and restrict job creation.

All those factors could combine to keep unemployment high.

“It will be the mother of all jobless recoveries,” predicts economic historian John Steel Gordon.

On the other hand, it’s possible some technological innovation not yet envisioned could generate a wave of jobs. Yet at the moment, most economists aren’t betting that any such breakthroughs will rescue the labor market.

The last time the jobless rate reached double digits, in the early 1980s, it took six years to bring it down to normal levels.

Unemployment hit a post-World War II high of 10.8 percent at the end of 1982 as the country was emerging from a severe recession. The rate fell to around 5 percent in 1988. It took less than two years for the number of jobs to return to its pre-recession level.

In this recovery, the economy is far more fragile.

Hard-to-get credit is exerting a drag. Wounds from the banking system’s worst crisis since the Great Depression will take years to fully heal. People and companies, scarred by the crisis, are likely to restrain borrowing, spending and investing.

Some analysts think the jobless rate might have already peaked at 10.2 percent in October. But most economists predict the rate will peak at around 10.5 percent by the middle of next year.

“We are digging out of a very deep hole,” says Lynn Reaser, chief economist at Point Loma Nazarene University in San Diego and chief economist for the National Association for Business Economics.

Reaser estimates it will take until 2015 for the unemployment rate to drop to 5.5 percent.

A sputtering job market carries other consequences. One is flat wages. When many people compete for few jobs, employers have no incentive to raise pay.

The economic shocks of the past decade already have cut into Americans’ incomes. That’s among the reasons why people feel they’re standing still economically.

Median household income, adjusted for inflation, fell to $50,303 in 2008, according to the U.S. Census. That gauge combines wages and salaries, investment income and government benefit payments like Social Security. It’s down 4 percent from a peak of $52,587 in 1999, when incomes were bolstered by stock gains from the dot-com boom.

That bubble burst in 2000. Since then, workers have seen meager wage gains. Adjusted for inflation, wages grew about 13 percent in the past 10 years — the slowest pace in five decades, according to calculations made by Scott Hoyt of Moody’s Economy.com.

That trend is predicted to continue.

“There will be a continued hollowing-out of the middle class,” says H.W. Brands, a historian at the University of Texas.

He points to productivity growth, which has let companies produce more with leaner work forces, the offshoring of service-sector jobs and the shrinking of factory jobs.

That’s why Vicki Adriano, 51, who works at a General Motors plant in Lordstown, Ohio, looks ahead to the coming decade with trepidation.

The economic wreckage of the past year means she’ll probably have to work longer than she had expected at the factory– at least seven more years. She frets about the loss of economic security.

“Everything you worked for all those years can be gone in a minute,” she says.

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Wreckage probe nears end; Jamaica awaits details

December 27th, 2009

KINGSTON, Jamaica— Authorities investigating why an American Airlines jetliner overshot a runway in Jamaica will receive flight data next week that will help establish a cause for the accident that sent dozens to the hospital, an official said Saturday.

The study of the plane’s wreckage will end Sunday, and officials will then review flight data recorder information that is expected in the next few days, said Oscar Derby, director general of Jamaica’s Civil Aviation Authority.

“We are investigating every possible factor,” he said. “We are leaving no stones unturned.”

Flight 331 overshot the runway at Norman Manley International Airport late Tuesday and plowed through a gate, halting just short of the Caribbean Sea. The Boeing 737-800, which was landing in heavy rain on a flight from Miami, cracked open in several places, but all 154 people aboard survived. Ninety-two were taken to hospitals, and 13 admitted.

Work crews planned to remove the jet’s tail late Saturday because it was blocking 900 feet (270 meters) of the runway, limiting it to smaller aircraft, Derby said.

Offshore lights that help guide pilots into Jamaica’s main airport were not working at the time of the accident, but officials sa to the hospital, an official said Saturday.

The study of the plane’s wreckage will end Sunday, and officials will then review flight data recorder information that is expected in the next few days, said Oscar Derby, director general of Jamaica’s Civil Aviation Authority.

“We are investigating every possible factor,” he said. “We are leaving no stones unturned.”

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Airlines: New rules keep passengers in seats

December 27th, 2009

WASHINGTON— Some airlines were telling passengers on Saturday that new government security regulations prohibit them from leaving their seats beginning an hour before landing

The regulations are a response to a suspected terrorism incident on Christmas Day.

Air Canada said in a statement that new rules imposed by the Transportation Security Administration limit on-board activities by passengers and crew in U.S. airspace. The airline said that during the final hour of flight passengers must remain seated. They won’t be allowed access to carryon baggage or to have any items on their laps.

Flight attendants on some domestic flights are informing passengers of similar rules. Passengers on a flight from New York to Tampa Saturday morning were also told they must remain in their seats and couldn’t have items in their laps, including laptops and pillows.

The TSA declined to confirm the new restrictions.

Homeland Security Secretary Janet Napolitano said in a statement Saturday that passengers flying to the U.S. from overseas may notice extra security, but she said the measures “are designed to be unpredictable, so passengers should not expect to see the same thing everywhere.”

A transportation security official speaking on condition of anonymity because the official wasn’t authorized to speak publicly said passengers traveling internationally could see increased security screening at gates and when they check their bags, as well as additional measures on flights such as stowing carryons and personal items before the plane lands.

A Nigerian passenger on a Northwest Airlines flight from Amsterdam allegedly attempted to start a fire as the plane prepared to land in Detroit on Friday, according to authorities. The incident has sparked a major international terrorism investigation.

Air Canada said it was limiting passengers to one carryon bag in response to a request from the U.S. and Canadian governments.

The airline advised U.S.-bound passengers to restrict their carryon item to “the absolute minimum” or to not carry any bag on board at all.

“Carriage of any carryon item will result in lengthy security delays for the customer,” the airline said.

U.S.-bound flights on all airlines are experiencing significant delays, said Duncan Dee, Air Canada’s executive vice president and chief operating officer.

A spokeswoman with Infraero, a Brazilian government agency that oversees airport infrastructure, said that airlines had been asked by federal authorities to add another layer of security for international flights originating in the country after the attempted attack in the U.S.

The official, who spoke on condition of anonymity because she was not authorized to discuss the matter, said that passengers would face an extra screening that would take place just before they boarded planes. She would give no more details, citing security concerns.

David Castelveter, a spokesman for the Air Transport Association, said the domestic airline industry has been in close coordination with the security administration since Friday’s incident and there will be increased scrutiny of passengers. He declined to comment on whether new regulations have been put in place.

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Associated Press writers Eileen Sullivan in Washington and Bradley Brooks in Rio de Janeiro contributed to this report.

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High-tech vehicles pose trouble for some mechanics

December 27th, 2009

LOS ANGELES— A sign inside the Humming Motors auto repair shop says, “We do the worrying so you don’t have to.”

These days, owner David Baur spends a lot of time worrying in his full-service garage near downtown Los Angeles.

As cars become vastly more complicated than models made just a few years ago, Baur is often turning down jobs and referring customers to auto dealer shops. Like many other independent mechanics, he does not have the thousands of dollars to purchase the online manuals and specialized tools needed to fix the computer-controlled machines.

Baur says the dilemma has left customers with fewer options for repair work and given automakers an unfair advantage.

“When I was younger, I kept going until I solved the problem,” the weary mechanic said as he wiped grease from his hands while taking a break. “Lately I find myself backing out. I’m more reluctant to take complex jobs on.”

Access to repair information is at the heart of a debate over a congressional bill called the Right to Repair Act. Supporters of the proposal say automakers are trying to monopolize the parts and repair industry by only sharing crucial tools and data with their dealership shops. The bill, which has been sent to the House Committee on Energy and Commerce, would require automakers to provide all information to diagnose and service vehicles.

Automakers say they spend millions in research and development and aren’t willing to give away their intellectual property. They say the auto parts and repair industry wants the bill passed so it can get patented information to make its own parts and sell them for less.

“Coke doesn’t give away the recipe for Coke,” said Charlie Territo, a spokesman for the Alliance of Automobile Manufacturers. “What this bill seeks to get is the recipe for Coke.”

Many new vehicles come equipped with multiple computers controlling everything from the brakes to steering wheel, and automakers hold the key to diagnosing a vehicle’s problem. In many instances, replacing a part requires reprogramming the computers — a difficult task without the software codes or diagrams of the vehicle’s electrical wires.

Mechanics say repair information gets constantly updated so they must know how to find answers amid the sometimes overwhelming amount of data. Keeping up with technology has become almost a part-time job and requires thousands of dollars to get the right tools and online manuals for each model.

“Doctors have it easy because the human body doesn’t change model every year,” said Paul Brow, owner of All-Car Specialists, a 30-year-old shop in suburban San Gabriel.

The technology wave has made even the simplest tasks difficult for some ill-equipped mechanics. Baur, for instance, said he couldn’t turn off the “check tire pressure” light after fixing a 2008 Mercury Grand Marquis because he lacked the roughly $1,000 tool to reset the tire pressure monitor.

The customer said he has to visit the dealer shop to complete the job.

“The tires are fine, for some reason the light just stays on,” Louis Ontiveros, 42, said. “I haven’t had the time to deal with it.”

Dealership shops may be reaping profits from the technological advancements. A study released in March by the Automotive Aftermarket Industry Association found vehicle repairs cost an average of 34 percent more at new car dealerships than at independent repair shops, resulting in $11.7 billion in additional costs for consumers annually.

The association, whose members include Autozone, Jiffy Lube and other companies that provide replacement parts and accessories, contend automakers want the bill rejected so they can continue charging consumers more money.

“You pay all this money for your car, you should be able to decide where to get it repaired,” said Aaron Lowe, the association’s vice president of government affairs.

Opponents of the bill counter that the information and tools to repair the vehicles are available to those willing to buy them. They say any mechanic who can’t get what they’re looking for can file a complaint with the National Automotive Service Task Force. The nonprofit takes the complaints to carmakers and tries to resolve them through a voluntary arbitration process. Of the 44 complaints filed last year, all were resolved, according to the organization.

The bill, introduced by Rep. Edolphus Towns, D-N.Y., has been stalled in the House committee since April but has attracted 51 co-sponsors. It’s unclear when or if the committee will vote on the matter.

Not all independent mechanics want to see the proposal approved.

Donny Seyfer, owner of a repair shop in Wheat Ridge, Colo., said the bill gives the impression that mechanics are unable to fix cars unless Congress steps in.

“I am so upset they’re out there telling my customers that I can’t do my job,” said Seyfer, who leads training classes for mechanics. He said the modern mechanic must take regular training classes and spend hours reading and networking with other mechanics to share the latest repair information.

Seyfer said mechanics can’t afford to work on all types of cars because vehicles are increasingly built with unique specifications and require their own set of tools. Mechanics must specialize in a select number of models to stay competitive, he said.

Baur said specialization is a luxury he can’t afford. He said he bought the garage 20 years ago from a former boss who serviced all kinds of cars.

“What are you going to do? Refuse service to the people who’ve been coming here all these years?” he said.

Carolyn Coquillette, owner of a 2-year-old shop in downtown San Francisco that specializes in hybrid vehicles, said she spends about $11,000 a year on diagnostic tools and subscriptions to online databases. She said she passes the cost down to the customer but can compete with dealer shops by offering better deals.

She said her shop offers another advantage: Her team of mechanics can modify technical features and convert the hybrids — which are powered by battery and gasoline — into plug-ins.

“Cars present a challenge to me,” Coquillette said. “I can think it’s a pain in my butt, or I can think this is why I’m paid to do this job.”

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US seeks global security stepup on US-bound travel

December 27th, 2009

AMSTERDAM— Airline passengers across Europe faced body searches and new limits on hand luggage Saturday after U.S. authorities requested tighter security in response to an attempt to bomb an airliner in Detroit.

U.S.-bound travelers were undergoing body searches at Amsterdam’s airport, where authorities say Umar Farouk Abdul Mutallab of Nigeria boarded Northwest Airlines Flight 253 and tried to set off an incendiary device as the plane was descending to its destination.

“The extra measures apply worldwide on all flights to the U.S. as of now and for an indefinite period,” says Judith Sluiter, spokeswoman for the Dutch National Coordinator for Counterterrorism.

Passengers flying to the United States from London’s Heathrow said they received text messages informing them that the hand baggage allowance had been reduced to one item. Airport officials also said security had been heightened.

“We got a text message this morning at about 11 a.m. to say that new rules meant we could only take one piece of hand luggage,” said Karen Ward, 44, from Reading, Berkshire. “I think they’ve handled it very well.”

Italy’s civil aviation authority, ENAC, said it had tightened security at airports for passengers leaving for the United States, with measures including increased manual body and baggage searches.

The extra measures were requested by the U.S. Transportation Security Administration and will initially remain in place for 72 hours, ENAC said in a statement.

Dutch authorities said the suspect boarded a flight in Lagos for the Amsterdam connection. With flights generally reported on time Friday, the Nigerian would have landed on his KLM Boeing 777 before dawn and had a layover of nearly three hours at Schiphol Airport before the Northwest Airbus A330 lifted off for the nine hour flight to Detroit.

His name was on the passenger manifesto that routinely was forwarded to the U.S. before takeoff, and the list was cleared, Sluiter said. He had a U.S. visa valid for the first half of 2010, but Sluiter did not know what kind of visa he had or where it was issued.

An initial investigation showed that the Amsterdam security professionals conducted all the normal procedures for Flight 253 without irregularities, she said, though it’s always possible that potentially dangerous weapons can elude the standard equipment.

The general alert level at Schipol was not immediately raised after the incident, and security procedures for other flights remained unchanged, Sluiter said.

Schiphol, one of Europe’s busiest airports with a heavy load of transit passengers from Africa and Asia to North America, strictly enforces European security regulations including only allowing small amounts of liquid in hand luggage that must be placed inside clear plastic bags.

The airport has been testing full body scanners for about a year that allow security staff to see the outline of a passenger’s beneath their clothes, and intend to roll out a more complete program next year, said airport spokeswoman Mirjam Snoerwang.

Mutallab’s leg was badly burned after his abortive attempt to cripple the plane, an indication that he had strapped the incendiary device onto his leg. It was unclear, however, when he attached the device or whether the body scanner would have caught it.

European Union Security Commissioner Jacques Barrot said the European Commission is working to ensure all security regulations were followed throughout Europe.

Passengers in Brussels, where the EU is based, were advised to reach the airport three hours before departure to allow time for a second security check at the boarding gate.

A spokeswoman for Germany’s interior ministry said that stepped up security at airports was being considered, but noted the nation already has measures considered among the strictest in the world.

“We still assume a high threat for Germany, but we see no need to change our current security measures at this time,” an interior ministry spokeswoman, who did not give her name in line with government policy, told DAPD news agency on Saturday.

Aviation officials throughout the Mideast reported no new restrictions directly connected to the Detroit incident, but said that security was already very high throughout the region.

India, also a target of terrorism in the past, said it was maintaining its normal security measures. “We are in any case alert. I’m not aware of any new steps taken today,” said Onkar Kedij, spokesman for India’s Home Ministry.

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Associated Press Writers Paisley Dodds in London, Ariel David in Rome , Melissa Eddy in Berlin and Ashok Sharma in New Delhi contributed to this report.

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Iraqi and Iranian forces in oil well standoff

December 27th, 2009

AMARA, Iraq (Reuters) — Iraqi and Iranian forces are dug in on either side of a disputed inactive oil well in the sensitive border area, with Iraqis vowing to fight if necessary to fend off another occupation of the well by Iranian soldiers.

Iraqi troops say they will defend the well, where Iranian troops raised a flag for several days this month.

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It is unclear how many troops are involved in the stand-off, but as many as 30 lightly armed Iraqi troops usually occupy border outposts in sensitive areas, and up to 10 in other areas. Some 11 Iranian soldiers are stationed near the disputed well.

The seizure of the well, which Iraq says is part of its Fakka oilfield in southeast Maysan province, triggered protests from the government in Baghdad and caused a rise in prices on jittery world oil markets.

The Iranian forces have since pulled back, but Iraq says they are still on its territory, stirring echoes of the border dispute that led to the eight-year Iran-Iraq war in the 1980s, in which about 1 million people died.

"These wells in the Fakka region are Iraqi, and we will defend them to the last drop of blood," said Brigadier-General Razak Abdul Hassan of the Iraqi border guards at Fakka.

0:00 / 2:03 Tough drilling ahead for oil

The Iranians are 100 metres inside Iraqi territory, he said, some 80 metres from the disputed well. Iraqi troops watch from nearby, and both sides appear to be hunkered down behind earth walls at their bleak desert outposts.

Extra forces

Hassan said Iraq has deployed extra forces to other wells nearby, but declined to outline numbers.

The well, which has only been operative briefly in the 1970s, now sits in an effective no man’s land as a binational committee prepares to begin work early next year demarcating the border in the oil-producing border region.

"After that the word will be very clear and precise. We expect and know the result is that the well is Iraqi, and the Iranians will admit this," said Ali Maarij, head of Iraq’s state Maysan Oil Co., in charge of Fakka and surrounding fields.

Well No. 4 was drilled in 1979 and produced about 3,000 barrels a day, a small amount for a region that is home to some to the world’s largest oil reserves. The well went offline in 1980 due to the Iran-Iraq war, and has been inactive since.

Yet the symbolism of the brief Iranian occupation was more serious. Fakka is part of the Maysan oilfield complex, with reserves of 2.5 billion barrels, which Iraq tried unsuccessfully to auction off to foreign oil firms this year.

The mere threat of future incursions or border feuds puts more risk onto the 10 oilfield deals the Iraqi government did secure this year, some of which are near the Iran-Iraq border.

Oil firms are already jittery about working in a country just emerging from years of bloodshed after the 2003 U.S. invasion, and where bombings and shootings are still common.

The occupation was also damaging for Iraq’s Prime Minister Nuri al-Maliki, whose party is contesting March 7 national polls. His government’s response to the dispute was relatively muted, and Iranian troops faced no apparent military resistance.

Iran-Iraq ties have warmed since the ouster of Sunni Arab Saddam Hussein in 2003. Many in Iraq’s new Shi’ite leadership took refuge in majority Shi’ite Iran during Saddam’s reign.

But relations have been strained by accusations of Iranian interference in Iraq and by Tehran’s opposition to the presence of U.S. troops. Being seen as close to Iran has become a liability for Iraqi politicians ahead of the general election.

"We are determined and persistent in the defence of our border. We will not give up even an inch. We are confident and able … and ready for any action at any time," said Major General Habib al-Husseini, head of Maysan security operations. 

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Nursing crisis looms as baby boomers age

December 26th, 2009

NEW YORK (CNNMoney.com) — America could be facing a nursing shortage that will worsen exponentially as the population grows older.

The problem: Baby boomers are getting older and will require more care than ever, taxing an already strained nursing system.

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Lab instructor Lisa Rubin leads a class at New York University’s College of Nursing.

America has had a nursing shortage for years, said Peter Buerhaus, workforce analyst at Vanderbilt University School of Nursing in Nashville, Tenn. But by 2025, the country will be facing a shortfall of 260,000 RNs, he said.

"In a few short years, just under four out of 10 nurses will be over the age of 50," said Buerhaus. "They’ll be retiring out in a decade. And we’re not replacing these nurses even as the demand for them will be growing."

That’s because nursing schools are already maxed out.

"We’ve got to find another portal to bring nurses into the profession," said Claire Zangerle, chief executive of the Visiting Nurse Association of Ohio and former chief nursing officer at the Cleveland Clinic. "We don’t have enough nursing instructors, so therefore the capacity of nursing schools is very limited."

The nursing profession has benefited from the recession, which has prompted new nurses to sign up for school and older nurses to postpone retirement, Buerhaus said.

Some 243,000 registered nurses entered or re-entered the profession during the recession that began in 2007, he said, including many who were forced out of retirement by financial difficulties.

But as the economy improves that kind of growth is unlikely to continue. And experts stress that there will be a nursing shortage even if every nursing school is at capacity.

0:00 / 1:26 Robo-nurse to the rescue

A lack of teaching staff is the biggest hurdle to minting new RNs, according to Cheryl Peterson, director of nursing practice and policy for the American Nurses Association

"The problem on the supply side is that our current nursing education capacity is at its limit," she said. "[Nursing schools] are pumping out about as many as they can."

Dr. Mary O’Neil Mundinger, the dean of Columbia University Nursing School in New York, said the number of applicants jumped 20% this year to about 400. She said the roster includes professionals seeking a career switch from Wall Street, law and even the opera.

"Making choices between these extremely well qualified applicants is really daunting," she said, noting that the school has capacity for only half the applicants.

Indeed, Claire Zangerle from the Visiting Nurse Association of Ohio said her niece spent two years on a waiting list before getting accepted into a nursing school.

It’s hard to recruit and retain nursing instructors when they can usually make more money working in a hospital.

The average starting pay for an RN is about $56,000, according to the American Nurses Association. Mundinger said that the most ambitious graduates can earn as much as $90,000 if they’re willing to work long hours, including weekends and night shifts, in busy metropolitan hospitals.

"They need to pay nursing faculty a wage that is attractive enough," said Peterson of the ANA, "You have nurses working in hospital units who are making more than the nurses in education."

Barry Pactor, international director of global health care for consulting company HCL International, agrees that more nurses should be trained within the U.S. system. But as a short term solution for this "huge shortage," he said the U.S. government should loosen immigration restrictions on foreign health care workers.

"I don’t see this as foreign nurses taking American jobs, because these are vacancies that already exist and cannot be [filled] by nurses currently in training," he said. "We’d be filling in the gaps until the training can catch up with the demand." 

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Shoppers return to malls, looking for deals

December 26th, 2009

Shoppers returned to malls Saturday, rummaging through thinly stocked shelves hunting for deals, next year’s Christmas gifts and, for most, gifts for themselves.

Retailers made a push to woo gift-card-toting shoppers by slashing prices and offering doorbuster deals often reserved for the day after Thanksgiving.

Diana Mayfield, a 56-year-old business trainer from Jacksonville, Ill. managed to get two Christmas ornaments for $6, marked down from $28. She was out before dawn Saturday, scouring for next year’s Christmas gifts.

“It’s 60 percent off original, so that’s pretty good,” she said while eyeing a rack of sweaters. “I usually get my electronics the day after Thanksgiving, and we get clothes and paper goods the day after Christmas.”

Knowing shoppers would likely spend less, merchants carefully managed inventory this Christmas. That meant on Dec. 26, some store shelves were practically empty.

Donna Brown, a 52-year-old hair dresser from Seaford, Del., visited The Centre at Salisbury on Tuesday but returned Saturday to find few pairs of the $11.99 pajamas she’d been eyeing at J.C. Penney, which opened at 5 a.m.

“Now there’s nothing,” she said. “Everything’s been picked over.”

The week after Christmas is big business for retailers, making up 15 percent of sales last year, according research from ShopperTrak.

Thanks to a fluke in the calendar, merchants have a whole weekend to entice shoppers immediately after Christmas. That meant many stores were offering expanded hours Saturday and extra deals hoping crowds of gift-card-toting shoppers would snap up goods.

Retailers received a much-needed last-minute sales surge in the final days before Dec. 25, fueled by shoppers who delayed buying, waited for bigger discounts that never came or were slowed by last weekend’s big East Coast snowstorm.

But now they’re counting on the days after Christmas to perk up overall holiday sales in a season that looks like it’s modestly better than last year’s disaster.

The full holiday picture won’t be known until merchants report December sales Jan. 7. But most expect merchants’ fourth-quarter profits should be intact because they didn’t press the panic button.

ShopperTrak is sticking to its prediction for a 1.6 percent gain, compared with a 5.9 percent drop a year ago.

The National Retail Federation expects that total retail sales will slip 1 percent, though some experts say that might be a bit too cautious. A year ago, they fell 3.4 percent by the trade group’s calculations.

——–

AP Retail Writer Anne D’Innocenzio contributed to this report from New York. Heher reported from Salisbury, Md.

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Flint study asks: How does well-kept grass matter?

December 26th, 2009

FLINT, Mich.— As Flint tries to survive and thrive as a smaller city, the thousands of abandoned homes and vacant lots scattered throughout its neighborhoods are more than a reminder of its past as a manufacturing boomtown.

They’re a costly headache to keep from getting wildly overgrown, with grass that can grow several feet high before being mowed.

Grass experts, sociologists and community leaders have teamed up on a three-year project to cut some of that grass and try to test the idea that maintained lawns and parks help revitalize neighborhoods. Lessons learned in Flint, they hope, could be used around the country.

“At one of the areas we’re looking at, there’s basically a park but no one is playing in it,” said Thom Nikolai, a Michigan State University turfgrass specialist who is leading the study. “We want to come back in a year and see people throwing a Frisbee around.”

Flint’s population has fallen to about 115,000 from a peak of about 197,000, leaving behind many crumbling neighborhoods. Emblematic of the industrial decline across the Rust Belt as auto plants closed and more than 89,000 General Motors jobs there dwindled to about 6,000, researchers want to see the economic effects of improving lawns and parks.

Stephen Gasteyer, an assistant professor of sociology at Michigan State, said researchers plan to measure what effect lawn and park improvements have on neighborhoods. And they want to learn more about how community groups, for example, keep up vacant land and abandoned homes.

“One of the realities, at least for the time being for places like Flint … is that private investment to turn around a community, with all its discontents, is not likely to be an option,” Gasteyer said.

Researchers began work last month at the site of a former convalescent home. A “turf garden” likely will be grown there to allow researchers, government officials and the public to see how different types of grasses look and whether kinds that grow slower might ease the upkeep of vacant lots.

Another test site will be around Ramona Park in the Metawananee Hills neighborhood, which is peppered with vacant homes but described by residents as stable. Members of the neighborhood association in recent years have cut grass at the park when the city didn’t, and they’ll volunteer to mow other yards throughout the area.

“We want to see if it’s going to be contagious,” said David L. Caswell, 68, a retired school principal who has lived in the neighborhood for more than four decades and is a member of the association.

Wendy Johnson, co-chair of the association, said the foreclosure crisis that’s swelled the number of empty homes in Flint and nationwide hasn’t hit the neighborhood as hard. Vacant homes pepper the area, but neighbors have been cleaning blighted properties and working to keep vandals from targeting empty homes.

“You may not see that when you take a look around the neighborhood, but the neighborhood is very stable,” Johnson said. “We are trying to create … a desirable sense of place.”

The project, with its community involvement, fits the spirit of Flint’s broader revitalization efforts. Mayor Dayne Walling is holding neighborhood meetings to help figure out how to use Flint’s limited resources. Faced with a budget deficit of $10 million, the city mows some vacant lots only once a year. But others are tended by residents or used for community gardens.

Lawn mowers are being donated by John Deere. Funding includes $50,000 a year for three years, plus supplies, from Marysville, Ohio-based lawn and garden products maker The Scotts Co. Researchers also look at environmental effects such as how thicker, well-maintained grass keeps soil — and polluting runoff — in place.

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