U.S. Factory Orders Fell 0.5 Percent in June

By MARTIN CRUTSINGER, Associated Press

WASHINGTON (AP) — Companies placed fewer orders with U.S. factories in June from May, signaling further weakness with manufacturing.

The Commerce Department said Thursday that factory orders fell 0.5 percent in June, the third decline in four months.

Orders for core capital goods, considered a good proxy for business investment, dropped 1.7 percent. Demand fell for heavy machinery and computers.

Manufacturing has been a key source of growth in the U.S. since the recession ended in June 2009. But in recent months, factory activity has weakened along with the broader economy.

[READ: U.S. Manufacturing Sector Shrank For Second Month.]

U.S. factory orders in June totaled $465.8 billion, up 42.5 percent from the recession low hit in March 2009.

Demand for long-lasting goods, items such as autos and airplanes, increased 1.3 percent in June. Demand for non-durable goods such as petroleum products, fell 2 percent.

Job growth has slumped since March, leading U.S. consumers and businesses to cut back on spending, That has lowered demand for factory goods. Europe's economic woes and slower growth in China, India and Brazil have also reduced demand for American exports.

The weaker economy is affecting factories. U.S. manufacturing shrank for the second straight month in July, according to a survey by a trade group of purchasing managers.

Overall economic growth slowed to an annual rate of just 1.5 percent in the April-June quarter, down from an already lackluster 2 percent growth rate in the January-March quarter.

The economy isn't growing fast enough to lower the unemployment rate.

The Labor Department reports on July unemployment and job growth Friday. Economists predict employers added 100,000 jobs last month. That would be slightly better than the 75,000 a month average from April through June but still below the healthy 226,000 average in the first three months of the year. The unemployment rate is expected to stay at 8.2 percent.

[READ: Burlington Coat Factory to Pay $15M Fine.]

The Federal Reserve cited the weaker growth in a statement Wednesday in which Fed officials repeated a pledge to try to boost growth in hiring remains weak. The Fed statement noted that growth has slowed in the first half of the year with job creating slackening and consumer spending tapering off.

Many economists believe the Fed will launch another round of bond buying at its September meeting in an effort to give the economy a boost by pushing long-term interest rates lower.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

View the original article here

U.S. Wants Tougher Pakistani Action Against Haqqanis

By BRADLEY KLAPPER, Associated Press

WASHINGTON (AP) — The Obama administration expressed renewed frustration with Pakistan on Tuesday, urging its reluctant counterterrorism ally to break remaining links between its security services and the Haqqani network and stem the flow of bomb-making material into Afghanistan.

A State Department report credited Pakistan's government with taking action against al-Qaida last year, even though the United States acted unilaterally in the commando operation that killed Osama bin Laden in Pakistan. It called Islamabad's attempts weaker when it came to snuffing out groups such as the Haqqani network and Laskhar e-Taiba.

[Debate: Is Pakistan a Reliable Ally?]

At a Senate confirmation hearing, the diplomat nominated to be America's next ambassador to Pakistan said that getting Islamabad to crack down on the Haqqani network would be his "most urgent" responsibility.

"This will be a primary focus of my activities and diplomatic engagement with Pakistanis, to encourage further measures against the Haqqani network, further squeezing of the Haqqani network," Richard Olson said.

The Haqqani network, a subsidiary of the Taliban, is based in northern Pakistan but moves into Afghanistan to launch attacks on U.S. and NATO forces before returning to Pakistani territory. The Pakistanis say they're doing all they can to rein in the Haqqanis, but elements in the Pakistani intelligence and military communities maintain relations with him to hedge their bets for when the United States leaves Afghanistan in 2014.

Olson also commended Pakistan for helping the U.S. so that "we are virtually within grasp of defeating al-Qaida as an organization," but said far more could be done to combat the threat of the Haqqanis.

Congress has been pressuring the Obama administration to slap the terrorist label on the network. By voice vote last week, the Senate approved a bill that would require the secretary of State to report to Congress on whether the Haqqani network meets the criteria to be designated a foreign terrorist organization and if not, to explain why. The report is due within 30 days of the president signing the measure.

The bill now goes to President Barack Obama.

Presenting the annual "Country Reports on Terrorism," the State Department's counterterrorism coordinator, Daniel Benjamin, declined to comment on the pending legislation or his department's review. He noted that the administration has targeted top individuals of the Haqqani network with sanctions, even if it hasn't issued a blanket designation for the entire group.

U.S. officials say the network represents perhaps the biggest threat to Afghanistan's stability through its use of Pakistan as a rear base for attacks on American and coalition troops. Congress is impatient. Some lawmakers believe the Obama administration is reluctant to act because it still hopes to coax the Taliban and affiliated groups into Afghan reconciliation talks that would help the U.S. withdraw combat forces over the next two years.

The State Department's report said violent extremists continue to find refuge in Pakistan, leading to more aggressive and coordinated attacks in Afghanistan. One example was the Haqqanis' September assault on the U.S. embassy and NATO compound in Kabul, which included small arms fire and rocket-propelled grenades from insurgents at a construction site less than a kilometer away.

Roadside and other bombs remain a major risk to coalition forces, the report said. Most are made from materials such as ammonium nitrate fertilizer and potassium chlorate manufactured in Pakistan, which has taken "some measures" to restrict the flow.

The report also warned about gains in Yemen made by al-Qaida's Arabian peninsula offshoot and the continued threat posed by Iran and Hezbollah.

Benjamin called Iran the "pre-eminent" state sponsor of terrorism and said the international terror campaign that it and its Lebanese proxy Hezbollah are conducting rivals any by the tandem since the 1990s.

In total, there were more than 10,000 terrorist attacks in 70 countries last year. Some 12,500 people were killed, the majority in Afghanistan, Pakistan and Iraq.

View the original article here

Dems Reject GOP Move to Force Layoff Notices

Sen. Lindsey Graham during a hearing on Capitol Hill in Washington, Tuesday, June 12, 2012. (AP Photo/J. Scott Applewhite)

By DONNA CASSATA, Associated Press

WASHINGTON (AP) — Senate Democrats rejected a Republican effort to force defense contractors to send out notices of possible job layoffs four days before the election, calling the move politically driven and purely speculative based on looming spending cuts.

The Senate Appropriations Committee voted 17-13 against an amendment by Sen. Lindsey Graham, R-S.C. The provision would have overturned Labor Department guidance this week to federal contractors that they do not have to warn their employees about potential layoffs from the automatic, across-the-board cuts that kick in Jan. 2.

[See a Collection of Political Cartoons on the Democratic Party.]

A 1980s law, known as the WARN Act, says those notices would have to go out 60 days in advance of the cuts, which would put them in workers' mailboxes four days before the Nov. 6 election.

The guidance letter said it would be "inappropriate" for employers to send such warnings because it remains speculative if and where the $110 billion in automatic cuts might occur. About half the cuts would be in defense.

"This is bad policy, not necessary and appears to serve a political agenda," Appropriations Committee Chairman Daniel Inouye, D-Hawaii, told Graham and the panel.

Graham insisted the cuts aren't speculative but rather the law. He quoted from then-Sen. Barack Obama, who in 2007 pushed legislation calling for 90-day notices for employees of potential layoffs.

"Contractors are not the problem. We're the problem. We created this mess," Graham said, arguing that the notices would force Congress to come up with an alternative to avert the automatic cuts.

President Obama and congressional Republicans agreed last summer to a deficit-cutting bill that includes a mechanism that would trigger across-the-board cuts to defense and domestic programs totaling $1.2 trillion over 10 years.

Ratcheting up the political pressure, presidential candidate Mitt Romney and fellow Republicans have accused Obama of shirking his duty as commander in chief by failing to negotiate with Congress on a way to avoid the cuts. Democrats counter that Republicans, who voted for the cuts, must consider higher taxes on the wealthy as part of an alternative to the reductions.

Graham suggested that Obama call Sen. John McCain, the top Republican on the Armed Services Committee and the 2008 presidential nominee, to work out a compromise.

Questioned about that idea, White House spokesman Jay Carney said Obama "believes that if Republican leaders were to tell him that they were ready to support the basic principles that we need to address our fiscal challenges in a balanced way, then we could move forward with a plan for deficit reduction that doesn't just cut spending, doesn't just reform entitlements, but also asks everyone to pay their fair share."

"We could get this done very quickly," Carney said.

Adding to the political recriminations is the possibility that major defense contractors such as Lockheed Martin Aeronautics Co. would notify its 120,000 employees of possible cuts the Friday before the election, effectively giving it a say in the outcome of the presidential race and congressional contests.

The White House fears this could hurt Obama's re-election chances in states with heavy concentrations of defense workers, such as Virginia.

[See a Collection of Political Cartoons on Healthcare.]

Graham and two other Republican senators — McCain and Kelly Ayotte of New Hampshire — spent two days this week in the battleground states of Florida, North Carolina, Virginia and New Hampshire, warning voters of job losses from the automatic cuts.

In fact, Deputy Defense Secretary Ashton Carter told Congress on Wednesday that the cuts wouldn't affect money already in the pipeline for defense contractors.

Inouye suggested it was far-fetched that Lockheed Martin would fire all its employees.

Lockheed Martin is the builder of the F-35 stealth fighter, the costliest aircraft ever. The next-generation fighter jet has been troubled by schedule delays and cost overruns. Ten years in, the total F-35 program cost has jumped from $233 billion to an estimated $385 billion. And, recent estimates say, the entire program could exceed $1 trillion over 50 years.

View the original article here

Men's Mags Dress to Impress in September Issues

High fashion is an increasingly high priority among men, as evidenced in the September issues of men's style magazines.

Last week, Vogue announced that its September issue would have 658 pages devoted to ads. That's 13 percent more room for artful couture advertisements than in its 2011 September book, and its best September showing since 2008. Elle and InStyle are also talking up their biggest September issues ever, with 400 total pages and 440 ad pages, respectively.

[See just how much wifi charges upset hotel guests.]

Those figures have captured plenty of buzz in the fashion world, but lost in all of the chatter are the men's magazines. They don't come in at the hernia-inducing weights of the more women's-focused publications (and they get far less attention), but magazines that focus on men's style say that the September issue gets an outsized focus as well.

"Our year isn't quite as lopsided as for women's fashion magazines, but this one issue does represent somewhere between 16 to 17 percent of our annual revenue. It's definitely weighted toward this issue," says Chris Mitchell, vice president and publisher at GQ.

"September's like sweeps week for television," explains Kevin Martinez, VP and publisher at Details, whose September issue will also be its largest thus far in 2012.

The month is crucial for fashion and style magazines, with plenty of new clothing collections from top designers to showcase. Details and GQ, two major men's magazines that focus on style, are showing boosts over last year's September page count. GQ reports that its September 2012 issue has grown by 5 percent from last year, to 204 ad pages, and Details says its September issue will have more than 240 pages, including 140 ads—20 percent more advertisements than last year. Meanwhile, Esquire will have an estimated 99 ad pages. That's down 20 percent from last year, but the publication's September 2011 issue was its largest September ever, and was up 26 percent from the year before.

[See why some business owners blame Groupon for their troubles.]

A slowly improving economy may be boosting these magazines' ad sales, but cultural trends also appear to be at work.

"The last couple of years, men's spending has been a bright spot," says Martinez. Men's designers have begun changing their clothing lines periodically, he says, exchanging narrow lapels for wide lapels, for example, as the seasons change.

"They're changing their design every single year to force men to say, 'Okay, I gotta pick up some more clothes. I gotta buy more shirts.' ... So it's really similar to what they were doing for women," he says.

All of this contributes to an atmosphere in which men being conscious of their looks has become the norm.

"We no longer look at lot of these guys who really care about how they look, how they dress, how they groom, as fanatical. It is now perfectly acceptable." says Marshal Cohen, chief industry analyst at market research firm NPD Group.

[See why the next Fed chair will have the toughest job in Washington.]

This even makes for a shift at men's publications that are less focused on style. Chris McLoughlin, publisher at Men's Journal, says that his readers have been clamoring for more content about grooming, despite the fact that his magazine is focused more on "gear," as he describes it.

"What I think is really interesting is the idea of 'metrosexual' is already really passé," says McLoughlin. "We're beyond it now."

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.

View the original article here

Phelps Finishes Second For 18th Career Medal

By PAUL NEWBERRY, Associated Press

LONDON (AP) — Michael Phelps flipped away his cap in disgust, having blown the race with a blunder at the end.

He hardly looked like the swimmer who had just equaled the record for most Olympic medals.

Phelps won his 18th career medal Tuesday night, but it was only a silver. Having led the entire way in the 200-meter butterfly, he tried to glide to the wall after his final stroke and was out-touched by Chad le Clos of South Africa.

[PHOTOS: The 2012 Olympic Opening Ceremony.]

Le Clos pounded the water when he saw the "1'' beside his name.

Phelps hung on the lane rope and buried his face in his hands, disgusted with himself for having squandered another chance to win his first gold of the London Games.

Le Clos won in a time of 1 minute, 52.96 seconds. Phelps finished in 1:53.01, while Japan's Takeshi Matsuda took the bronze in 1:53.21.

Despite his mistake, Phelps tied Soviet gymnast Larisa Latynina for the most Olympic medals. But he wanted to take the mark down with a flourish, not back into it. In fact, this was a shocking mistake by a swimmer who won a memorable race at the Beijing Games when a rival made the very same error.

Four years ago, Milorad Cavic thought he had the 100 fly in the bag after his final stroke. Phelps made the split-second decision to get in one more stroke and slammed into the wall — one-thousandth of a second ahead of the Serbian swimmer.

This time, it was Phelps on the losing end. He was also denied a chance to become the first male swimmer to win the same individual event at three straight Olympics.

Still, before the night was done, Phelps was expected to claim the medal record all to himself. He was swimming the anchor leg for the favored Americans in the 4x200 freestyle relay.

[PHOTOS: The 2012 U.S. Olympic Trials.]

In the first final of the night, American Allison Schmitt won the 200 freestyle with a dominating performance that left everyone else, including teammate Missy Franklin, battling for the other medals.

Schmitt won with an Olympic-record of 1:53.61. France's Camille Muffat took silver in 1:55.58, almost a body length behind, while Bronte Barrett of Australia took the bronze over Franklin by a thousandth of a second. Barrett touched in 1:55.81. Franklin, who led after the first 50, was fourth in 1:55.82.

___

Follow Paul Newberry on Twitter at www.twitter.com/pnewberry1963

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

View the original article here

NOAA: Oceans' Reefs at Risk From Carbon Emissions

Not all carbon emissions find their way into Earth's atmosphere—about half of it is absorbed by vegetation and the world's oceans. On the one hand, that helps limit carbon's climate-changing effects. But on the other, it can deliver what a National Oceanic and Atmospheric Administration scientist calls a "double whammy" to the oceans.

That's because carbon dioxide is a weak acid, and when it's absorbed by water, it contributes to ocean acidification, which can kill coral reefs and shellfish, wreaking havoc on undersea plant and animal life.

['Astonishing' Heat Wave Melts 97 Percent of Greenland Ice Sheet]

As humans have increased their carbon emissions over the past 100 years, vegetation and the world's surface oceans have been working overtime to absorb about half of it, about the same proportion as 50 years ago, according to the study, published Wednesday in Nature.

"Humanity is getting an assist on climate change from natural systems, otherwise the carbon dioxide in the atmosphere would be twice as high," says Pieter Tans, one of the study's authors. "But CO2 is an acid and the amounts [being absorbed by the ocean] are so massive that I don't see how we can remedy coming acidification."

[Have the Koch Brothers Changed Their Mind About Climate Change]

Reforestation in parts of North America and China and deforestation slowdowns in other parts of the world have allowed plants to bear some of the burden, but he says the ocean is working overtime to pull in more carbon than ever before.

But even though Earth is absorbing a similar proportion of carbon as it was 50 years ago, overall human emissions have greatly increased, meaning sea temperatures are rising even as they acidify. According to a Scripps Institution of Oceanography study released earlier this year, ocean temperatures have increased by about half a degree over the past 100 years; many scientists say that increase has been responsible for an increase in the severity and frequency of hurricanes.

[Report: Generation X Doesn't Care About Climate Change]

"Sea temperature change comes from climate change, but they're also acidifying," Tans says. "The oceans get a double whammy."

While increasing carbon emissions may take longer to wreak havoc on the world's climate, it could deal a death blow to vulnerable coral reefs, which shelter millions of plant and animal species, Tans says.

"Acidification is a concern for sea life—for the atmosphere, it's a good thing our oceans are absorbing so much carbon, but as the oceans acidify, it'll affect [coral reefs and shellfish], and work its way up the food chain," he says. "At some point, [reefs] are endangered. We're not too far away from that."

In the short term, it's good news that so much carbon dioxide is staying here on earth. But researchers aren't sure how long earth's vegetation can continue to keep up with increasing emissions. Because plants use carbon dioxide in photosynthesis, it's possible that plants simply use more carbon when it's available in a process known as the "CO2 fertilization effect," which allows plants to grow faster.

Despite nature's assist, the amount of carbon dioxide in the atmosphere is still increasing due to unprecedented fossil fuel emissions, Tans says, and "we're still in bad shape."

Jason Koebler is a science and technology reporter for U.S. News & World Report. You can follow him on Twitter or reach him at jkoebler@usnews.com

View the original article here

Majority Whip Kevin McCarthy: Cruz's Victory Signals Tea Party Momentum in Senate

If tea party candidate Richard Mourdock's primary smackdown against 30-year Indiana Sen. Dick Lugar wasn't proof enough, Ted Cruz's victory over Texas golden-boy Lt. Gov. David Dewhurst Tuesday proves the Tea Party wave is rolling its way to the United States Senate.

Cruz, who launched his campaign with two percent of support, defeated Dewhurst by 13 points Tuesday, a remarkable number considering he lost in the May primary by 10 percent. Cruz did well enough in the primary, however to keep Dewhurst from earning the 50 percent he needed to go straight to the general election, forcing him into a run-off. [Check out U.S. News Weekly: an insider's guide to politics and policy.]

The former state solicitor general has never held elected office, but Cruz's grassroots approach to the campaign trail together with his A-list supporters like former GOP vice presidential candidate Sarah Palin and South Carolina Sen. Jim DeMint transformed the political unknown into a tea party darling.

House Majority Whip Rep. Kevin McCarthy says in the November election, the Senate should expect the same kind conventional ousting similar to that of the House in 2010 when 87 budget hawk Republican freshman took control.

"The Senate is like the country club and the House is like stopping at the truck stop for breakfast," McCarthy says. "We are a microcosm of society, and we reflect it first. The Senate just hasn't had the opportunity to reflect it yet."

McCarthy says senators elected in 2006 during the Democratic sweep are about to be voted out with constituents favoring outsider candidates. McCarthy says, however, middle-of-the-road Republicans aren't safe either.

"People are tired of the gimmicks of the past," McCarthy says. "[There] is an anger on both parties that they don't want business as usual."

Next up on the docket is Missouri's contentious Republican primary, where three conservatives are vying for tea party votes. Wisconsin could prove another historic upset as Republican outsiders go up against the state's former governor Tommy Thompson in mid-August. And Arizona is the anti-establishment's last shot of the season as Will Cardon, a self-financed businessman, throws millions into a primary to defeat Arizona Rep. Jeff Flake.

Kyle Kondick, a congressional researcher at the Center for Politics at the University of Virginia, isn't hedging his bets on Republicans winning the Senate in a landslide, but he says the Tea Party is slowly infiltrating the body without a doubt.

"The tea party hasn't gone away," Kondick says. "There is an anti-establishment feeling in the country, a preference for outsiders who have less connection to government."

Chris Chocola, the president of Club for Growth, which financially backs conservative candidates like Cruz, says Republicans like Florida Sen. Marco Rubio and Pennsylvania Sen. Pat Toomey already carry the flag of fiscal conservatism, but says this year's elections could put tea party power at critical mass in the Senate.

"It doesn't take a whole lot of them in the Senate to change the culture because of the rules," Chocola says. "The type of people who are running and winning are not status quo candidates."

View the original article here

Annan Quits Syria Role, Blasts UN Security Council

Kofi Annan, Joint Special Envoy of the United Nations and the Arab League for Syria speaks during a news conference at the United Nations' Headquarters in Geneva, Switzerland.

By JOHN HEILPRIN, Associated Press

GENEVA (AP) — Kofi Annan said Thursday he will quit his high-profile role as special envoy to Syria at the end of the month, delivering blistering criticism of world powers' failure to unite to stop the country's escalating violence.

Annan told reporters that when he accepted the job, "which some called 'Mission Impossible'" — he wanted to help the international community, led by the U.N. Security Council, find a peaceful solution to the crisis. The goal was to stop the killings of civilians and human rights abuses, as well as to place Syria on a path toward political transition.

[See a Collection of Political Cartoons on Syria.]

"The severity of the humanitarian costs of the conflict, and the exceptional threats posed by this crisis to international peace and security, justified the attempts to secure a peaceful transition to a political settlement, however daunting the challenge," Annan said.

But the former U.N. secretary-general told reporters that he cannot go on when the New York-based, 15-nation Security Council doesn't back his role, particularly because of the standoff between its five veto-wielding members: Russia and China on one side, the United States, Britain and France on the other.

"Things fell apart in New York," he summed up. "The increasing militarization on the ground (in Syria) and the clear lack of unity in the Security Council have fundamentally changed the circumstances for the effective exercise of my role."

Annan was named the U.N.-Arab League envoy to Syria in February, overseeing a small staff in a secretive office in the sprawling Palais des Nations, the U.N.'s European headquarters in Geneva. He came up with a six-point peace plan to resolve the crisis in the Arab state, including a cease-fire that was supposed to take effect in mid-April.

But, despite the presence of hundreds of U.N. observers on the ground, the cease-fire never took hold and the violence in Syria has morphed into a civil war. Rights activists say that more than 19,000 people have died since the popular uprising against Syrian President Bashar Assad began in March 2011.

"The bloodshed continues, most of all because of the Syrian government's intransigence, and continuing refusal to implement the six-point plan, and also because of the escalating military campaign of the opposition — all of which is compounded by the disunity of the international community," Annan told reporters in Geneva.

[READ: U.S. Mum On Releasing Funds to Syrian Rebels.]

"At a time when we need — when the Syrian people desperately need action — there continues to be finger-pointing and name-calling in the Security Council."

On June 30, Annan succeeded in getting the major powers on the council — including stalwart Syria allies Russia and China — to agree on a broad framework for a political transition in Syria. But the Security Council never formally endorsed the plan or acted on it, something that sorely disappointed the envoy and, he said, undermined his efforts.

Annan did not single out any country for criticism, but said, "Without serious, purposeful and united international pressure, including from the powers of the region, it is impossible for me, or anyone, to compel the Syrian government in the first place, and also the opposition, to take the steps necessary to begin a political process."

"You have to understand: as an envoy, I can't want peace more than the protagonists, more than the Security Council or the international community for that matter," he said.

Annan's announcement coincided with Arab countries dropping a demand that Assad resign in the latest draft of a symbolic U.N. General Assembly resolution that faces a Friday vote in New York. The watered-down resolution further illustrated the international struggle to build an effective diplomatic approach to Syria's civil war.

The draft resolution was resisted by countries such as Brazil, Russia, India, China and South Africa who had problems with calling for regime change or sanctions. Russia and China have repeatedly vetoed stronger proposals on Syria in the Security Council, which, as the most powerful arm of the U.N., can adopt enforceable resolutions and impose sanctions.

View the original article here

U.S. Rate On 30-Year Mortgage Rises to 3.55 Percent

Homes are seen in the Lago Vista area of south San Antonio.

By MARCY GORDON, Associated Press

WASHINGTON (AP) — The average U.S. rate on the 30-year fixed mortgage rose this week after falling to new record lows in each of the past 13 weeks.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 3.55 percent. That's up from 3.49 percent last week, which was the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, increased to 2.83 percent. That's above last week's record low of 2.80 percent.

[READ: Negative Equity Problem Could Make Foreclosure Crisis Even Worse.]

Cheaper mortgage rates have helped drive a modest but uneven housing recovery this year. Sales of new and previously occupied homes fell in June from May but were higher than the same month last year. Home prices have started to rise in a majority of cities.

Builders are also more confident after seeing more demand for homes. In June, they increased their spending for a third straight month.

Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.

Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

The sluggish job market could deter some from making a purchase this year. The Labor Department reports Friday on July unemployment and job growth.

The Federal Reserve said Wednesday that the economy is losing strength and repeated a pledge to take further steps if the job market doesn't show sustained improvement.

The Fed took no new action after its two-day meeting. But it acknowledged that economic activity had slowed over the first half of the year, unemployment remains elevated and consumer spending has weakened.

[READ: Don't Pay Off Your Mortgage If This Describes You.]

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans slipped to 0.6 point from 0.7 the previous week.

The average rate on one-year adjustable rate mortgages fell to 2.70 percent from 2.71 percent. The fee for one-year adjustable rate loans declined to 0.4 point from 0.5 point.

The average rate on five-year adjustable rate mortgages rose to 2.75 percent from 2.74 percent last week. The fee was unchanged at 0.6.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

View the original article here

Defense Official: Cuts Hit Warfighters, Weapons

This Sept. 7, 2011 file photo shows a U.S. Marine sweeping for land mines in the Helmand Province of southern Afghanistan. U.S. troops in Afghanistan have quietly achieved one small but important victory over the past year: They are finding and avoiding more improvised explosive devices, or IEDs, than a year ago. That's thanks to a surge in training, equipment and intelligence.

By DONNA CASSATA, Associated Press

WASHINGTON (AP) — Warfighters heading to Afghanistan would receive less training while the Navy would be forced to buy fewer ships if lawmakers fail in the next five months to come up with an alternative deficit-reduction plan, a Pentagon official said Wednesday.

Imploring Congress to act, Deputy Defense Secretary Ashton Carter and the White House's acting budget chief, Jeff Zients, outlined the devastating effect on defense and domestic programs if $110 billion in across-the-board reductions begin on Jan. 2.

[Army Vet: Stubborn Generals Stifled Afghan Conflict.]

That approach "is a blunt, indiscriminate instrument designed to force congressional action on achieving a balanced deficit reduction plan," Zients told the House Armed Services Committee. "It is not the responsible way for our nation to achieve deficit reduction."

Compromise, however, seems highly unlikely before the November election as the issue is caught up in the political fight over taxes and spending. Democrats insist any plan to spare the military include tax increases on high-wage earners; Republicans reject any plan that calls for higher taxes.

In a testy exchange, Rep. Randy Forbes, R-Va., insisted that President Barack Obama has done nothing to address the "atrocities" of the impending cuts.

Zients pointed out that Congress wrote the law calling for the automatic cuts and has five months to act. "What's holding it up is the Republican refusal to make the top 2 percent pay their fair share" in taxes, he said.

Carter said military personnel would be exempt from the automatic cuts, but every other military account would be affected, from weapons to the number of hours commissaries operate to potential furloughs.

"Some later-deploying units (including some deploying to Afghanistan) could receive less training, especially in the Army and Marine Corps," Carter said. "Under some circumstances, this reduced training could impact their ability to respond to a new contingency, should one occur."

In the three months to the election, Republicans are using the looming reductions in military spending as a political cudgel against Obama, arguing that the commander in chief is willing to risk the nation's security as he uses the leverage in the budget showdown with Congress. Republican presidential candidate Mitt Romney has echoed GOP lawmakers' criticism.

[READ: Obama Nominated Diplomat Seeks Pakistani Action.]

Democrats counter that Republicans who voted for the cuts are trying to wriggle out of last August's deficit-cutting agreement and they must consider tax increases as part of any congressional compromise to stave off reductions.

Twenty-two Republicans on the committee, including the chairman, Rep. Howard "Buck" McKeon of California, and 18 Democrats voted for the cuts. Thirteen committee Republicans and seven Democrats, including ranking member Rep. Adam Smith of Washington state, opposed them.

Raising the political stakes, GOP Sens. John McCain of Arizona, Kelly Ayotte of New Hampshire and Lindsey Graham of South Carolina spent two days in some of the most contested presidential states warning of the impact of the cuts on local businesses and jobs. They demanded that Obama negotiate with Republicans and Democrats to work out a solution.

Responding to the announcement sparing personnel, the three expressed frustration with the administration's handling of the issue.

"Rather than coming to the table with Republicans and Democrats in Congress to finally address the issue of budget sequestration, the Obama administration is flailing around attempting to make sequester look less devastating than it actually is. Today's announcement increases the impact of these arbitrary cuts on the readiness of our armed forces," they said in a statement.

Senate Majority Leader Harry Reid, D-Nev., noted that there are "a few Republicans wandering around the country stirring up things" on the looking cuts, and he urged the lawmakers to try to persuade other Republicans to back tax increases.

View the original article here

Apple Claims Samsung Copied iPhone Technology

By PAUL ELIAS, Associated Press

SAN JOSE, California (AP) — Apple Inc. designer Christopher Stringer spent many of his 17 years at the company developing the company's iconic iPhone and iPad.

On Tuesday afternoon, the Apple designer wrapped up the first day of testimony in a closely watched patent trial proudly discussing his accomplishments in support of his employer's lawsuit alleging Samsung Electronics Co. ripped off Apple's technology to market its own products.

[READ: Apple Sags As Consumers Buy Cheaper Phones.]

Dressed in a tan suit, the bearded and long-haired Stringer said because of Apple's desire to create original products, he and his co-workers surmounted numerous engineering problems such as working with the products' glass faces in producing both products over a number of years. Stringer said he was upset when he saw Samsung's Galaxy products enter the market.

"We've been ripped off, it's plain to see," Stringer said. "It's offensive."

In his opening statement moments before, Samsung attorney Charles Verhoeven countered Apple's allegations by arguing that the South Korean company employs thousands of designers and spends billions of dollars on research and development to create new products.

"Samsung is not some copyist, some Johnny-come-lately doing knockoffs," he said.

Verhoeven asserted that Apple is like many other companies that use similar technology and designs to satisfy consumer demands for phones and other devices that play music and movies and take photographs.

For example, he said several other companies and inventors have filed patent applications for the rounded, rectangular shape associated with Apple products.

"Everyone is out there with that basic form factor," Verhoeven said. "There is nothing wrong with looking at what your competitors do and being inspired by them."

Earlier, an attorney for Apple told the jury that bitter rival Samsung faced two options to compete in the booming cellphone market after Steve Jobs introduced the iPhone to critical acclaim in 2007: Innovate or copy.

Samsung chose to copy, making its smartphones and computer tablets illegal knockoffs of Apple's popular products, attorney Harold McElhinny claimed.

Samsung "has copied the entire design and user experience" of Apple's iPhone and iPad, McElhinny told a jury during his opening statement at the patent trial involving the world's two largest makers of cellphones.

A verdict in Apple's favor could lead to banishment of Samsung's Galaxy products from the U.S. market, said Mark A. Lemley, a professor and director of the Stanford Program in Law, Science, and Technology.

A verdict in Samsung's favor, especially if it prevails on its demands that Apple pay its asking price for certain transmission technology, could lead to higher-priced Apple products.

The witness lists of both sides are long on experts, engineers and designers and short on familiar names. Apple CEO Tim Cook is not scheduled to testify.

The trial resumes Friday with the testimony of Apple senior vice president for marketing Philip Schiller.

Cupertino, California-based Apple Inc. filed its lawsuit against Samsung Electronics Co. last year and is demanding $2.5 billion in damages, an award that would dwarf the largest patent-related verdict to date.

[READ: 12 Best Apps for iPhone, iPad, and Droid.]

The case marks the latest skirmish between the two companies over product designs. A similar trial began last week, and the two companies have been fighting in other courts in the United Kingdom and Germany.

In the patent case, U.S. District Judge Lucy Koh last month ordered Samsung to pull its Galaxy 10.1 computer tablet from the U.S. market pending the outcome of the patent trial. However, she barred Apple attorneys from telling jurors about the ban.

Apple lawyers argue there is almost no difference between Samsung products and its own, and that the South Korean company's internal documents show it copied Apple's iconic designs and its interface.

Samsung counter-claims that Apple copied its iPhone from Sony. In addition, Samsung alleges Apple is using some of Samsung's own inventions without payment, such as a computer chip at the heart of the iPhone.

View the original article here

Bristol-Myers Exec Charged With Insider Trading

A sign stands in front of the Bristol-Myers Squibb Company's headquarters in a Lawrence Township, N.J.

By SAMANTHA HENRY, Associated Press

NEWARK, N.J. (AP) — A Bristol-Myers Squibb executive was arrested Thursday and accused of using nonpublic information on companies his employer was considering buying to make stock trades that netted him $310,000.

In each case, federal authorities said, Robert Ramnarine was able to use inside knowledge to take advantage of something that almost always happens when a big company announces plans to acquire a smaller one: The smaller company's stock price shoots up.

[READ: Senate Overwhelmingly Approves Insider Trading Ban.]

Even as he made the trades, Ramnarine fretted about getting caught, authorities said. According to a federal complaint, he did an Internet search for "can options be traced to purchaser" just before making a series of trades in November 2011.

And in an application to make online options trades in 2010, he told a retail brokerage that he was employed by Merck & Co., rather than Bristol-Myers.

Ramnarine, who lives in East Brunswick and began working at the pharmaceutical giant in 1997, was arrested Thursday morning by the FBI. He was due to appear in U.S. District Court in Newark later in the day.

It was not immediately clear whether he had hired a lawyer. Authorities say he could face up to 20 years in prison and fines of $5 million if he's convicted.

Ramnarine, 45, was first director and later executive director of the arm of the company responsible for pension and savings investments, authorities said in the criminal complaint. In those roles, he was tasked with completing due diligence on companies Bristol-Myers targeted for acquisitions and was given information about the firms' pension plans.

Authorities say he abused that knowledge in three planned corporate transactions as Bristol-Myers went on a corporate buying spree as it tried to generate new products before the blood thinner Plavix got competition from a generic version in May.

The complaint alleges Ramnarine bought shares and options for Seattle-based ZymoGenetics Inc. in August and September 2010 just before Bristol-Myers announced plans to buy the company. He sold his interests the day after the public announcement.

[READ: 6 UK Bank Workers Sentenced For Insider Trading.]

The complaint said he followed a similar course in November 2011 when Bristol-Myers attempted to buy Pharmasset, Inc. — which was eventually sold instead to Gilead Sciences Inc. of Foster City, Calif. — and again earlier this year when it and partner AstraZeneca PLC of Britain made an offer for San Diego-based Amylin Pharmaceuticals Inc. The Amylin sale has not been completed.

Bristol-Myers said in an email that the company has put Ramnarine on administrative leave and is cooperating with the investigation. The company, as prosecutors noted in the complaint, warns employees against insider trading.

Bristol-Myers has headquarters in New York but has facilities around New Jersey, including in Princeton where Ramnarine works.

Meanwhile, Bristol-Myers shares were falling sharply Thursday because the company announced Wednesday night that it had halted a mid-stage study of a key experimental drug for hepatitis C. The company said at least one patient had suffered heart failure and so it was investigating the cause and whether it was related to the drug, as well as checking on the other patients in the study.

___

AP Business Writer Linda A. Johnson in Trenton, N.J., and AP writer Geoff Mulvihill in Haddonfield, N.J., contributed to this story.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

View the original article here

Cheer the Olympians—But Tax Them, Too

U.S. gymnasts McKayla Maroney, Kyla Ross, Alexandra Raisman, Gabrielle Douglas and Jordyn Wieber bite their gold medals after victory ceremony at the Artistic Gymnastics women's team final at the 2012 Summer Olympics, Tuesday, July 31, 2012, in London.

We all get a little light-headed watching the Olympics, as we feel awed by the athletes' amazing feats, inspired to get off the couch, and moved, even, by NBC's sappy profiles.

Then, most of us regain our senses.

 [Check out our gallery of political cartoons.]

But not Marco Rubio. The Republican Senator from Florida—and possible Mitt Romney's running mate—has introduced a bill to make prize money earned by U.S. athletes at the Olympics exempt from income taxes. The U.S. Olympic Committee, you see, awards winning athletes $25,000 for a gold medal, $15,000 for a silver and $10,000 for a bronze. The IRS considers winnings and prize money regular income. Rubio's Tax Exemptions for American Medalists Act (the TEAM Act—get it?) would make an exception for Olympic medalists, so they get to keep all the prize money.

The idea is populist and elitist at the same time, and raises numerous objections. First, Republicans are usually the first to complain about all the arbitrary loopholes in the tax code, while pushing for simpler and flatter taxes for everybody. Why make Olympians a special case? You can't keep carving out exemptions for favored groups if you really want to make the tax code fairer.

Exempting medalists is also wildly discriminatory. It favors winners over losers, for one thing, since those who come in fourth or lower wouldn't get any special treatment, even if they win prize money at some event other than the Olympics. The games supposedly embody the spirit of competing over the glory of winning, so do the winners really need even more special treatment than they get already?

[See what will happen to your taxes in 2013.]

A tax exemption for medalists would also be a tax break for millionaires who don't need it. Many of the top athletes, such as swimmers Michael Phelps and Ryan Lochte and soccer players Hope Solo and Abby Wambach, are already wealthy thanks to lucrative endorsement deals. Other Olympians, like teenage swimmer Missy Franklin, aren't wealthy yet, but probably will be before long.

Just about any athlete who wins a medal, in fact, stands to gain from the celebrity and exposure it brings, with exceptions, perhaps, for those who compete in obscure sports like kayaking or archery. When the anti-tax group Americans for Tax Reform estimated the typical tax payments for medal winners (which it said range from $3,502 for a bronze to nearly $9,000 for a gold), it used the highest tax bracket—35 percent—in its methodology. That's fitting. Anybody paying taxes at that rate typically earns at least $350,000 per year, which many U.S. Olympians do.

If we really want to come up with feel-good tax breaks for deserving Americans, we could certainly find people who could use them a lot more than Olympians at the peak of their abilities and fields. Most top athletes work indescribably hard, but many of them also enjoy privileges that allow them to make a career out of sport in the first place. They tend to have parents who can afford lessons and camps and trainers. They have access to expensive facilities like indoor pools and gymnastics arenas. Once they become successful, some pick up corporate sponsors who help finance their careers. The more privileges, the more of an edge you have, and the more medals you're likely to win.

[See what might be hiding in Mitt Romney's tax returns.]

If we want to offer rewards for people whose effort and accomplishment ought to inspire us, how about targeting the athletes who are devoted to their sports even though they have no hope of fame or fortune? The ones who make sacrifices nobody ever notices, simply for the love of what they do? Or the ones who made it to the medal stand without the benefit of wealthy parents or family connections?

For that matter, why not give an extra tax break to single working Moms or adults taking care of dying parents or anybody doing more than required, simply because it seems like the right thing to do? The Olympics can be a moving spectacle, but there are a lot of other Americans who give it their all, and might win a medal if any were offered. They're the ones at home watching the games on TV, keeping it all in perspective.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

View the original article here

Indian Businesses No Stranger to Power Outages

Two residents of Delhi sit near an electricity pole with illegal power supplies streaming from its power lines in New Delhi, India. The government privatized electricity distribution July 1 resulting in widespread outages. Blackouts lasting as long as 14 hours have been reported in the capital. (AP Photo/Manish Swarup)

By RAVI NESSMAN, Associated Press

GHAZIABAD, India (AP) — Work making potato chip display racks at Jayraj Kumar's factory barely paused when much of India's power grid collapsed.

The backup generators kicked in automatically and the electric saws, presses and welding machines kept running, just like they do during the five-hour power cuts the factory in suburban Delhi suffers nearly every day.

[PHOTOS: United States Gripped By Drought.]

India's unreliable power system has forced businesses to create a workaround electricity system of noisy, dirty diesel generators that prepared them well when the world's worst blackout hit the country Tuesday.

But the trouble has also vastly increased businesses's expenses, dragged down their productivity and hampered economic growth in the country.

"Running a factory is very tough here," Kumar said.

Power Minister Veerappa Moily said Wednesday the government would not allow a recurrence of the massive power outages. On Monday, 370 million people lost power for hours when the northern grid collapsed. On Tuesday, 620 million had no electricity after the grid collapsed again, dragging down two neighboring grids.

Moily said an investigation had begun and while he said he didn't want to cast blame yet, he cautioned states not to take more than their allotted power.

"If they overdraw, this is the result. They can see for themselves. The entire grid will go black," he said.

The government needed to investigate ways to resolve the disparity between supply and demand, perhaps with congestion pricing, plugging leaks in the distribution system and bringing more power plants on line, he said.

Hundreds of millions of Indians have no access to electricity anyway. Many who do were insulated from the blackouts' effect by the coping systems they use to handle the smaller power cuts that are routine across the country.

[PHOTOS: Skydiver Makes 18-Mile Jump.]

The private Max Hospital in New Delhi said its generators were set up to fully power the facility. "The electrical system is so designed that patients do not feel even a flicker of power disruption at any point of time," the hospital said in a statement.

Microtek, an Indian company that specializes in selling power backup inverters, claims to have 100 million "satisfied customers."

"Every year in the summer months demand peaks and there are power failures, so most middle-class families purchase an inverter. That's why we're in business," said Manoj Jain, vice president at Microtek.

According to World Bank statistics, India lost 6.6 percent of sales due to power outages in 2006, the last year statistics were available. By contrast China's losses were 1.3 in 2003, the latest data available.

Kumar, 56, started his business turning metal wire into display racks 23 years ago with just three employees.

Now his company, The Rhino, runs a factory of 200 workers that churns out 1,500 red racks a day for clients from PepsiCo to Nestle that are ubiquitous in markets across India.

When the company opened its new factory in this Delhi suburb three years ago, "we knew that power would be a problem," he said.

"From the very first day, whenever we start an office or factory we immediately think of having a decent power backup," he said.

Behind the cavernous whitewashed factory, lined with workers operating spot welding machines and kicking up sparks as they saw through metal, stands a large, green 80 megawatt generator on a brick foundation. In a corner on the ground floor is another generator rigged with a truck ignition that starts with a belch of gray smoke. Nearby, two more generators are hooked up, and, taking no chances, Kumar bought a fifth one Wednesday.

The factory runs 16 hours a day, at least five of them on generator power, he said.

This backup system comes at a huge price for Kumar's business.

"Generators are meant for emergencies, they aren't meant for production purposes," he said.

Each generator costs 1 million rupees ($18,000) and has to be replaced every three years. The four full-time generator operators cost him another 1.2 million rupees ($21,600) in salaries. He pays 4 million rupees ($72,000) in diesel bills. In all, he estimates the generator power costs him 10 times as much per unit as the grid power and adds 20 percent to his overall costs.

View the original article here

Romney Returns To States After Troublesome Foreign Trip

View the original article here

America Squawks For, Against Chick-fil-A

This Thursday, July 19, 2012 photo shows a Chick-fil-A fast food restaurant in Atlanta.

Nothing gets America fired up like chicken -- and gays getting married.

For proof, witness Chick-fil-A Appreciation Day, in which more than 600,000 people answered former Arkansas Gov. Mike Huckabee's call to support the restaurant's president's views against gay marriage. The event's Facebook page shows thousands joining the effort every few minutes.

[Chick-fil-A's Controversial Gay Marriage Beef]

"The goal is simple: Let's affirm a business that operates on Christian principles and whose executives are willing to take a stand for the Godly values we espouse by simply showing up and eating at Chick-fil-A on Wednesday, August 1," Huckabee writes on the Facebook page. "[Chick-fil-A] is a great American story that is being smeared by vicious hate speech and intolerant bigotry from the left."

Meanwhile, the show of support prompted opposing events all across the country staged by supporters of gay marriage and animal-rights advocates. Gay rights group GLAAD scheduled National Same-Sex Kiss Day, also known as Kiss Mor Chiks day, for August 3. People for the Ethical Treatment of Animals planned to stage protests at Chick-fil-A locations nationwide for both the its gay marriage stance and its treatment of chickens.

The chicken activism comes in response to comments made by Dan Cathy, president of Chick-fil-A and member of its founding family. In a radio interview last month, Cathy said the chain maintains it stance against gay marriage, and later went on to say that "we are inviting God's judgment on our nation" by supporting it.

What Do You Think: Should Cities Boycott Chick-fil-A Over Gay Marriage?

The comments sparked political uproar, with the mayors of Boston and Chicago speaking out against new Chick-fil-A locations in their cities. Supportive politicians such as Sarah Palin and former Republican presidential candidate Rick Santorum tweeted their approval of the chicken chain and Huckabee's 

Business partners of the chain, like Muppet toy-maker Jim Henson Co. and children's book franchise Berenstain Bears distanced themselves from the chain amid the controversy.

Seth Cline is a reporter with U.S. News and World Report. Contact him at scline@usnews.com or follow him on Twitter.

View the original article here

More Evidence That It's Time to Dump Ethanol

Like many bad ideas, it seemed like a good one at first. Unfortunately, Congress went way overboard.

About 40 percent of the corn produced in America is used to make ethanol, a gasoline additive that ends up in most Americans' gas tanks. When corn is cheap and plentiful, this is a marginally sensible idea. But when corn becomes scarce and prices rise—which is happening now, as a withering drought wrecks much of the nation's corn crop—ethanol production competes directly with the use of corn for food, causing a needless rise in food prices.

[Slideshow: Obama's crackdown on corporate America.]

Some experts are now calling for Washington to temporarily issue waivers from the law so that more corn can be diverted away from ethanol production and help stabilize rising food prices—which would help consumers not just in the United States, but in poorer countries as well. The problem is that subsidies doled out by Washington for years have distorted the farm economy and left many growers overdependent on a fuel that might not exist without Washington's help. So changing policies now would harm some farmers who, rightly or not, have received implicit promises from Washington to protect their livelihood.

Though it's less efficient than gasoline, corn-based ethanol began to catch on as a home-grown motor fuel during the oil shocks of the 1970s, since it seemed like a way to reduce U.S. dependence on oil from the volatile Middle East. Then it gained allure in the 1990s as a renewable fuel that helps reduce emissions. In the early 2000s, President George W. Bush approved new measures that raised the requirements for the use of renewable fuels—mainly, corn ethanol. All along, Congress, pushed by farm-state legislators, has cranked up ethanol subsidies, which now stand at about $6 billion per year.

[See why the SUV era is officially over.]

This has happened even though ethanol is not very appealing to consumers. The fuel economy it generates is about 25 percent lower than it is for gasoline, which is why the use of E85 (which is 85 percent ethanol and 15 percent gasoline) never really caught on, even though the Detroit automakers have produced millions of "flex-fuel" vehicles with minor modifications that allow them to run on any blend of ethanol and gas. Ethanol costs about 30 cents less per gallon than gasoline, but when you factor in the poorer mileage, the overall cost of running on E85 would be slightly higher for most drivers. So there's no natural incentive to choose it over gasoline.

Ethanol is still mixed with much of the gasoline sold at gas stations, in a blend known as E10 (10 percent ethanol) which most cars can burn without any modifications. This serves two purposes: It oxygenates the gas, which reduces harmful emissions and smog, and it pumps up sales for blenders and corn growers who benefit from the subsidies arranged by their buddies in Congress. Many drivers don't know it, but one reason they tend to get lower gas mileage than the government's own estimates is the presence of ethanol, which government mileage tests don't account for.

[See why Mitt Romney's stance on GM would cost taxpayers.]

Even Congress, however, has begun to acknowledge that government support for ethanol needs to end, as federal budget cutters raise the pressure to axe every wasteful dollar. Last year, the Senate voted to end the 45-cent-per-gallon federal subsidy on ethanol. The bill didn't make it out of Congress, but that was before this year's drought, which is raising the pressure to stop distorting the market for corn. Still, that could take a while, because subsidies for ethanol have helped it grow into a $42 billion industry that employs about 90,000 Americans, and Congress may think twice about jeopardizing anybody's job in such a weak economy.

Meanwhile, other developments are helping achieve the energy independence and lower emissions that were the original purposes of ethanol—with no unintended consequences for food prices or anything else so important. New technology has led to a sharp upturn in U.S. oil production, for one thing, making the nation more self-reliant. Hybrids, initially developed in Japan, have become mainstream, boosting mileage and therefore reducing the amount of gas burned, along with harmful emissions.

Tough new requirements for fuel economy have helped too, which suggests a better way to regulate energy than to subsidize one particular form of it. Presidents Bush and Obama both sharply increased MPG requirements, with the net result being average fuel economy in 2025 that will be roughly double what it is today. That has forced automakers to pursue every type of innovation they can think of to make cars more efficient, from different types of fuel to advanced under-the-hood technology. It's working.

In that case, Washington told automakers what they needed to do, but it didn't tell them how to do it. The result will assuredly be much better than if policymakers had ordered up a fleet of vehicles powered by electricity or hydrogen or natural gas. Technology and the economy change too fast these days for Washington to react in real-time. It's far better to let the markets react to changing conditions—and even to crises—than to lock in the use of any given resource indefinitely. The misallocation of corn has proven that.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

View the original article here

Obama Administration To Try Again On Taliban Talks

Pakistani Taliban supporters and soldiers.

U.S. officials see new evidence that Taliban leaders, under pressure from NATO and Afghan forces, are ready to talk about a settlement that might end the Afghanistan war.

The Obama administration's efforts earlier this year to negotiate with Taliban leaders largely failed due to differences between the group and Washington—and inside the Taliban's own ranks.

The last attempt at talks with the hard line Islamist group fizzled this spring, but the Obama administration signalled Tuesday it is ready to try again. The signal is the latest sign the White House is eager to end the decade-long war even faster than its own timeline to remove Western troops by the end of 2014.

"We're not abandoning Afghanistan...and the Taliban has taken notice," James Cunningham, the administration's nominee to take on the key post of U.S. Ambassador to Afghanistan.

[Photo Gallery: Opening Ceremony Spectacle.]

For the first time in months, Taliban leaders are "signalling they are open to negotiations," Cunningham told the Senate panel handling his nomination.

Cunningham, now the deputy ambassador to Afghanistan, said the Taliban must end their alliances with terrorist groups like al Qaeda before Washington would ink any peace deal.

The group "faces a choice: leave terrorism...or face ever-more capable Afghan forces," Cunningham told the panel.

The Obama administration has not sounded so upbeat about the prospects of talks with the Taliban since the weeks immediately following President Barack Obama's May 1 speech in Afghanistan during which he announced his administration is seeking "a negotiated peace" with the group that ruled Afghanistan until Sept. 11.

At that time, Obama extended an olive branch to the group, saying U.S. forces would not "eradicate every vestige of the Taliban."

Cunningham's push for peace talks is the latest in a spate of signs in recent months of a stark contrast between White House officials and senior American military commanders, who talk bluntly about defeating remaining Taliban forces.

Some Obama administration officials and foreign policy-minded lawmakers now believe what happens in Pakistan, where U.S. intelligence officials say much of al Qaeda remaining core group is located, is more important for America than what happens in Afghanistan.

Sen. John Kerry, a Massachusetts Democrat, cautioned his fellow lawmakers to avoid calling for Washington to cut off all the billions in annual aid monies it sends Pakistan for its help in Afghanistan and in the war on al Qaeda.

Thanks in part to Pakistani cooperation since Sept. 11, 2001, "we're in the position of virtually eliminating al Qaeda as a threat," Richard Olson, the White House's nominee to become ambassador to Pakistan, told the panel.

Washington and Islamabad are slowly mending fences that were twisted by a series of events that included the brash American commando raid that killed Osama bin Laden and U.S. forces mistaken helicopter attack that killed nearly 30 Pakistani soldiers.

Another touchy subject between the two reluctant allies: Pakistan's refusal to take out the Haqqani Network, a Taliban-aligned extremist group that operates from Pakistan and regularly strikes U.S. and indigenous targets inside Afghanistan.

Olson and several senators called for Pakistani officials to do more.

The nominee also announced Secretary of State Hillary Clinton is mulling whether to formally designate the Haqqani group as a terrorist entity, which would give Washington more tools to apply pressure to the organization and its most important members.

A recent Center for Strategic and International Studies report urged U.S. officials to get "realistic about the Taliban, Haqqani network, and other insurgents." The groups "remain a relatively small set of forces, they are unpopular in many areas, and they have suffered serious tactical reversals," the think tank says.

"As in Vietnam, the insurgents can lose every major tactical engagement and still win control in some Pashtun areas once U.S. and [NATO] forces are gone," CSIS says. "Peace negotiations will remain an extension of war by other means, and by the time the current round of U.S. and allied force cuts are completed this fall, they will either have regained the political momentum in key areas in the east or south or have halted any Afghan and [NATO] gains."

View the original article here

Ghost Town: London Businesses Bemoan Olympic Slump

Olympics rings flag flies over Tower Bridge. The logo of five rings, linked to show unity between athletes on five continents, was designed in 1912 by the founder of the International Olympic Committee, Pierre de Coubertin.

By JILL LAWLESS, Associated Press

LONDON (AP) — It is the best of times, it is the worst of times.

The Olympics have turned London into a tale of two cities, with shops, hotels, theaters and restaurants in the center suffering a tourist drought while crowds throng to the games a few miles to the east.

The huge Westfield Stratford City shopping center, smack beside the Olympic Park, is bustling with people visiting the games or simply catching some of the Olympic buzz while they shop. Cheerful London volunteers in pink and purple have been using megaphones to help marshal the crowds at Europe's largest mall.

[PHOTOS: The 2012 U.S. Olympic Opening Ceremony.]

But across town at the West End — London's main shopping and entertainment district — it's eerily quiet. There's plenty of space at restaurant patio tables, no need to elbow others out of the way on the sidewalks, and unusually attentive staff in the stores.

"It's a fiasco," said Peter Forrest, a street performer in Covent Garden, an area of shops, pubs and restaurants around a piazza that's normally teeming with tourists.

Forrest, painting whiskers to his face for his role as Doggie Man, said it's been "the worst two weeks ever for business."

"It's because of Boris," he added grumpily. "Boris told everybody not to come."

Many businesses blame London Mayor Boris Johnson, along with London transit bosses and games organizers, for scaring people away from central London.

Anticipating a huge strain on the city's transit network from a predicted extra million travelers a day, they have been warning Londoners for months to plan ahead, seek alternative routes or work from home.

The message has gotten through — but too well, tourism chiefs say.

Tom Jenkins, chief executive of the European Tour Operators Association, said London normally sees 300,000 foreign visitors and 800,000 domestic ones a day in August.

"These people have been told implicitly that they should stay away, and they have done so," he said.

In Leicester Square — usually so chock-a-block with tourists that locals give it a wide berth — a few families sat enjoying urban picnics on Wednesday, while sales people tried to drum up business for theater ticket booths from a trickle of passers-by. Olympic volunteers, deployed to give directions, did not find themselves in huge demand.

One American college student from Topeka, Kansas, who was traveling around Europe for the summer, was surprised at London's tame atmosphere.

"We thought it would be more crazy, with people everywhere, clubs packed and a frenetic sort of vibe like other cities we've been to in Europe," Jenny Logan as she walked near the Houses of Parliament. "But so far, the night life has been pretty tame and the little restaurants we wanted to explore in the cobblestone alleys have been deserted. What's going on?"

The gloom is repeated across London's major tourist attractions. The London Zoo said it had 40 percent fewer visitors last week than during the same period a year earlier. The Natural History Museum said its galleries were unusually quiet.

[Check it Out: The 99th Tour de France.]

Theater producer Nica Burns told the Evening Standard newspaper that her venues were "bleeding."

"For my six theaters, last week was the worst this year," she said. "I think the Olympics are great — but I feel like I've been the bulls-eye for the archery competition."

And there's even evidence people are postponing their nuptials until after the games. Christopher Woodward, director of London's Garden Museum, said there had been a steep drop in the number of wedding receptions being booked during the Olympic and Paralympic games. That period runs from July 27 to Sept. 9.

"No one is getting married in London in August," he said.

The ghost town effect is all the more galling to businesses because the predicted transit chaos has not materialized.

View the original article here

EPA Can't Regulate Livestock Farms It Can't Find

By TAMMY WEBBER, Associated Press

CHICAGO (AP) — The report to Congress was blunt: The U.S. Environmental Protection Agency had failed to regulate pollution from the nation's livestock farms — many capable of generating more waste than some cities — because it lacked information as basic as how many farms even existed.

Four years after the U.S. Government Accountability Office raised concerns and 40 years after the Clean Water Act gave the EPA the authority to protect the nation's waterways, the agency still doesn't know the location of many livestock farms, let alone how much manure they generate or how the waste is handled, because most of that information is kept by various state and/or local agencies — or not collected at all.

[READ: Out-Of-Control EPA is Hurting the Economy.]

At the same time, water-quality experts throughout the country cite livestock waste as a major contributor to water-quality problems, including in areas like the Chesapeake Bay, where manure runoff is believed responsible for up to one-fourth of phosphorus, which stimulates algae growth. If the EPA knew all the sources of that waste, it might be easier to stop it, environmentalists say.

So they were flabbergasted when the EPA recently decided against adopting a rule that would require livestock operators to provide the agency with information, opting instead to try to cobble it together from other state, local and federal sources — a decision they said puts the EPA right back where it started.

"It's been (decades) since we first started regulating them and we're not at a point where we know where they're at?" said Kelly Foster, senior attorney at Waterkeeper Alliance, one of several environmental groups that sued the EPA to get it to start collecting information on concentrated animal feeding operations, or CAFOs.

It's not unusual for CAFOs to have thousands of cattle, tens of thousands of hogs or millions of chickens in one location. The animals' waste is often stored in underground pits or outdoor lagoons until it's spread as fertilizer on cropland, ideally in a manner that avoids runoff into waterways. But pollution from faulty manure storage or runoff happens often enough to generate complaints, and environmentalists suspect many more problems go undetected.

To settle Waterkeeper's lawsuit, the EPA agreed to propose the rule requiring livestock operations to report information to the agency. But, it didn't promise to adopt it.

Industry officials said there's no reason for farmers to have to give the EPA information, especially if another government agency already has it or a farm isn't doing anything wrong.

"We're not keeping them from getting the information, but we don't need to turn it all over," said Michael Formica, an environmental lawyer for the National Pork Producers Council, which threatened to sue if the rule was adopted.

[READ: U.S. Judge Strikes Down EPA Water Rules For Mines.]

EPA spokeswoman Cathy Milbourn said nobody was available to discuss the decision. But the agency issued a statement saying it was withdrawing the proposed rule "in light of comments received from states regarding the amount of information states already have."

The EPA signed an agreement with the Association of Clean Water Administrators, whose members include state water-quality officials, to have that group help identify where the information is kept and how the EPA could get it. Alexandra Dunn, ACWA executive director and general counsel, said her organization believes it's better to assess how much information is already available before requiring farmers to report it, but acknowledged the EPA will only be able to get information other agencies are willing to share.

It's unclear how that would play out in some Republican-led states, where officials have been increasingly critical of the EPA's efforts to regulate everything from greenhouse gases to gas drilling. Even in largely Democrat-led states, like Illinois, getting information may be difficult.

View the original article here

More Bad News For Obama: Slowing Profits

President Barack Obama delivers remarks during a campaign event in Parma, Ohio.

For all of his supposed hostility toward business, President Obama's tenure in the White House has coincided with a remarkable string of profitability for corporate America.

Until now.

 [Slideshow: Obama's crackdown on corporate America.]

The same forces that are depressing economic growth finally seem to be cutting into profits at big firms that have seemed largely immune to debt problems in Europe, persistently high unemployment in the United States and other nagging problems. Perhaps more importantly, a number of big companies are downgrading their outlook for future profits. If they're right, the slowdown in corporate profits could intensify at a vulnerable time for Obama, with the next batch of numbers due on the eve of the November elections.

Most big companies are still profitable, but a number of bellwether firms have been falling short of expectations, which suggests the overall economy is even weaker than skeptical analysts have thought. Starbucks, McDonald's, Dow Chemical, Amazon and even Apple all fell short of analysts' earnings estimates for the second quarter, with some executives warning that future earnings may be disappointing as well.

Just a few weeks ago, forecasters expected third-quarter profits for firms in the S&P 500 index, which will start rolling in around mid-October, to rise by three percent or so, according to a survey of forecasters by Thomson Reuters. That would have been a respectable showing unlikely to cause much stress in financial markets. But analysts have turned sharply bearish, now predicting a 0.1 percent decline in third-quarter profits, which could augur a turbulent autumn for stocks and an even weaker hiring environment. Investors have been hoping that more monetary stimulus from the Federal Reserve and the European Central Bank will prop up stock values, but that medicine, if administered, could easily wear off by Election Day.

[See what will happen to your taxes in 2013.]

A slowdown in profits would interrupt one trend Obama can genuinely boast about. Since bottoming out during Obama's first year in the White House, corporate profits have risen consistently and been one of the few bright spots in an otherwise bleak economy. Big, multinational companies have been able to offset the slowdown in Europe and the United States by tapping into faster-growing developing economies such as China, India and Brazil.

Aggressive cost-cutting—including lots of layoffs—has allowed companies to remain highly profitable even if revenue stagnates or declines. And a global footprint allows many firms to shift their operations from region to region in the most efficient way.

But some problems are becoming too big to escape. McDonald's and Dow, for example, both cited slowing sales in Europe—much of which is in a recession—as a big contributor to weak earnings. Amazon and several other companies said a strong dollar, which is largely due to the weakness of the euro, cut into the profitability of overseas operations and pushed earnings down.

[See how Washington is wrecking the economy, Part 3.]

Many companies also believe that worries over the federal government's "fiscal cliff"—a huge set of tax hikes and spending cuts that will go into effect in 2013 if Congress can't compromise on a way to avoid them—are already depressing spending and confidence in the U.S. market. If Congress botches that, it could single-handedly cause a recession. With confidence in Congress's competence at record lows, many companies are preparing for the worst.

Obama's re-election probably hinges on a few distinct factors: Unemployment, the stock market, the price of gas and whether Americans feel like things are getting better or worse. Corporate profits aren't something most voters pay attention to, but they do directly determine whether companies are comfortable hiring and spending money, or more inclined to hunker down. Unfortunately for Obama, a bunker mentality may be taking hold, in case 2008 happens all over again.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

View the original article here

New 'Seal Flu' Outbreak Could Pose Threat to Humans

Harbor Seals at Woods Hole Science Aquarium.

Over the past few years, bird flu and swine flu outbreaks have harmed wide swaths of global populations—now scientists are warning that a new flu that developed in seals off the New England coast could pose a human threat.

Last winter, officials found 162 dead harbor seals in what was then thought to be a pneumonia outbreak. But a new investigation by Columbia University researchers has found that the dead seals had a new mutation of the influenza A virus. The virus started as avian, or bird flu, but the mutations may have created something new altogether.

[Universal Flu Vaccine Could Be Available by 2013]

"Once it moves into seals, it becomes seal flu," says Ian Lipkin, director of the Center for Infection & Immunity at Columbia University.

The fact that the virus was transferred from a bird to a mammal and the apparently high mortality rate of the seals that were infected raises concerns for humans, Lipkin says. In the seals, the virus mutated to become more transmissible in mammals, a key component for any human outbreak.

"Whenever you have something like this that emerges in wildlife that's associated with high mortality, we have to consider the possibility it could extend to humans," he says. "70 percent of emerging diseases move from animals to people—there's a long list of those: Ebola, hepatitis C, other flus, HIV, etc."

[H1N1 Flu Killed Far More Than Reported]

According to the Centers for Disease Control, influenza A viruses have been known to infect seals, ducks, chickens, pigs, whales, and horses, but such a large outbreak is extremely rare, Lipkin says.

Last winter, at least 12 Americans were infected with a new swine flu strain called H3N2v in five states, and humans are obviously much more likely to come into contact with a domesticated pig than a wild seal. But it only takes a few humans to be infected with a particularly virulent flu strain to start spreading the virus, Lipkin says.

"This may in fact be a new route in [to human infection]," he says. "I can't tell you if it'll move into humans, but it has the potential to do so."

Jason Koebler is a science and technology reporter for U.S. News & World Report. You can follow him on Twitter or reach him at jkoebler@usnews.com.

View the original article here

Wealthy Pakistani-American To Host Joe Biden At Lavish Los Angeles Fundraiser

The Bel-Air home of Shoukat Hussain Ali.

Vice President Joe Biden will spend this Friday at the California home of Shoukat Hussain Ali, a wealthy Pakistani-American businessman and Democratic donor who is hosting what appears to be his first fundraiser for President Barack Obama.

According to the Hollywood Reporter, tickets are going for $10,000 a head.

[See: Latest political cartoons]

Ali owns a palatial 7-bed, 8-bath residence in the tony Bel-Air neighorhood of Los Angeles, home to mostly Hollywood stars and business moguls. According to Zillow, the home's market value is nearly $5.3 million, and Ali's rent is estimated to be more than $43,000 a month.

While Friday appears to be Ali's first major fundraiser, he has already raised thousands for the Democratic party.

In the 2012 cycle alone, Ali raised at least $5,000 for President Obama, $2,000 for California Rep. Brad Sherman, $1,000 for California Senator Dianne Feinstein and $500 for Ohio Rep. Dennis Kucinich. In total, he has donated about $56,000 to state and federal candidates since 1990, according to the Center for Responsive Politics and National Institute on Money in State Politics.

Arline Bolin, the realtor who sold Ali the land for his home, says Los Angeles Mayor Antonio Villaraigosa is a frequent guest.

It is unclear how Ali made his wealth. His political donations are registered under the company name "Ali's Enterprises," a business located in Los Angeles' San Fernando Valley, which is pictured below.

On FEC filings, Ali has at times listed himself as a 7-11 owner, or as "self-employed." It is unclear whether Ali owns a single 7-11 store, or a number of franchises.

Bolin says Ali is known in the neighborhood as "a very good businessman."

But like many donors in the 2012 presidential election, Ali has no interest in speaking to the media. When reached by Whispers, Ali said "I don't want to talk to you," and abruptly hung up the phone.

Last month, when reporters at the New York Times attempted to understand the source of a similarly secretive donor's wealth, the donor disappeared altogether.

Elizabeth Flock is a staff writer for U.S. News & World Report. You can contact her at eflock@usnews.com or follow her on Twitter and Facebook.

Seth Cline is a reporter with U.S. News & World Report. Contact him at scline@usnews.com or follow him on Twitter.

View the original article here

U.S. Consumers More Confident in the Economy

A shopper checks her receipt outside Macy's in New York.

By MAE ANDERSON, Associated Press

NEW YORK (AP) — Americans breathed a bit easier about the economy in July, as a better outlook on short-term hiring and lower gas prices offset lingering worries about poor income growth.

The Conference Board said Tuesday that its Consumer Confidence Index increased to 65.9, from 62.7 in June, the first increase in five months. That's the highest reading since April and better than the reading of 62 that economists had forecast.

"Consumers had a much improved view of job prospects, not immediately, but six months from now," said John Lonski, chief economist at Moody's Capital. "They're extrapolating from the dip in energy prices and recent firming of equity prices."

[READ: For the U.S. Economy, the News is Bad and Worse.]

Still, the index remains well below 90, which indicates a healthy economy. It hasn't been near that level since the Great Recession began in December 2007. The index fell to an all-time low of 25.3 in February 2009 — four months before the recession officially ended.

Consumer confidence is widely watched because consumer spending drives 70 percent of U.S. economic activity. A separate Commerce Department report Tuesday showed Americans spent no more in June than May, even though their income grew by 0.5 percent.

The consumer confidence report is based on a poll conducted from July 1 through July 19 of about 500 randomly selected people nationwide.

Lynn Franco, director of economic indicators at The Conference Board, said consumers attitudes toward current conditions were little changed in July, and the overall index remains at historically low levels.

"While consumers expressed greater optimism about short-term business and employment prospects, they have grown more pessimistic about their earnings," she said in a statement. "Given the current environment — in particular the weak labor market — consumer confidence is not likely to gain any significant momentum in the coming months."

The amount of consumers expecting business conditions to improve over the next six months rose slightly, according to the survey. Those expecting more jobs in the months ahead increased as well. But fewer people in July expected that their incomes would increase.

"People are not only fearful of losing their jobs; they think that if you do lose your job, your next position may indeed be at a lower salary," said Lonski.

Consumer confidence has fluctuated over the past year. It rose during the first quarter and then retreated over the past four months.

"We believe consumer confidence will remain choppy until we have a resolution of the situation in Europe, or better yet, until the November elections," Lonski said.

The economy grew at a sluggish 1.5 percent annual pace from April through June, slower than the 2 percent rate in the first quarter. A key reason for the slowdown was weak consumer spending.

Economists generally say even 2 percent annual growth would add only about 90,000 jobs a month. That's too few to drive down the unemployment rate, which is stuck at 8.2 percent. That is expected to remain unchanged when the Labor Department releases its July jobs report on Friday.

[READ: Costly WiFi Means More Unhappy Hotel Guests.]

But on a bright note for consumers, housing prices are rising, indicating a modest recovery in the housing market. The Standard & Poor's/Case-Shiller home price index released Tuesday showed increases in all of the 20 cities tracked from April to May. And a measure of national prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings.

Gas prices have receded from highs. Retail gasoline prices were flat over the weekend at $3.49 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is about 45 cents cheaper than its peak price in April. It's also 22.4 cents cheaper than it was a year ago.

View the original article here

Grocers, High-End Clothiers Show Booming Growth

Supermarkets are well represented among the 100 fastest-growing retailers.

Smartphones, fancy clothes, and groceries drove retailers to the top last year, according to a new report.

Sprouts Farmers Markets tops the list of the 2012 Hot 100 Retailers, according to Stores magazine, a publication of the National Retail Federation. The Phoenix-based grocery store saw a nearly 72-percent boost in its sales in 2011. Also within the top 10 are three smartphone sellers—Verizon Wireless, Apple, and AT&T Wireless—family-owned grocer Lowe's Market Place, high-end clothier Michael Kors, and athleticwear peddlers Lululemon Athletica and Under Armour.

[See who moved in with their parents during the Great Recession.]

The retailers at the top "cater to shoppers' desire for smaller-footprint organic supermarkets, high-end workout apparel and luxury accessories, and even online shopping," said Stores Media Editor Susan Reda in a release accompanying the report.

According to the publication, these were the 10 fastest-growing retailers in the U.S. in terms of domestic sales growth between 2010 and 2011.

RetailerSales Growth (2010-2011)U.S. Retail Sales (000)

Source: National Retail Federation/Stores Magazine, August 2012.

The names at the top of the list are largely unsurprising, says Ken Perkins, president of retail industry analysis firm Retail Metrics. "I think these to me look similar to what we've been seeing coming out of the recession," he says.

For example, he says the apparel retailers near the top fill particular niches—like Lululemon, with its high-end yoga and running apparel.

[See how men's magazines beef up their September issues.]

That can make for highly loyal customer bases. These fast-growing clothiers "are among the best at creating true brand advocates who are willing to pay full retail prices and/or who have a business model that doesn't rely on discounts to drive traffic and appeal," said Mary Brett Whitfield, senior vice president of retail analysis firm Kantar Research, in a special report accompanying the figures.

Likewise, grocers that fit into the "natural" and organic niche, like Sprouts, have also shown recent strength, says Perkins. Perhaps the nation's best-known natural-food peddler, Whole Foods, posted strong growth last year, at 12.1 percent, putting it at No. 38 among the top 100.

"Those are the types of niche players in the food space that are growing rather rapidly, as upper-end and middle-income consumers are trying to eat healthier and moving into those types of retailers," says Perkins.

Still, there was growth among a range of grocers last year, from discount to high-end. Altogether, supermarkets accounted for nearly 20 of the 100 fastest-growing retailers in 2011, according to Stores.

Verizon Wireless, AT&T Wireless, and Apple likewise posted impressive sales bumps last year, which Reda calls "a clear indicator of how important smartphone devices have become." Apple was also boosted, no doubt, by its popular iPads and computers.

It's true that consumer interest and societal trends can boost a company to the top of the hot 100, but simple arithmetic can help, as Perkins points out. Five of the 10 fastest-growing retailers had U.S. sales of under $1 billion, while others had multi-billion dollar sales figures. That can make for a larger percentage bump for a smaller jump in sales.

[See how wifi charges affect hotel customer satisfaction.]

View the original article here