Stocks fall on subprime concerns

business week
NEW YORK

Stocks retreated Tuesday as investors grew more concerned that troubles for subprime lenders and weaker-than-expected retail sales signaled trouble for the economy.

Investors fled the already weakened stocks of subprime mortgage lenders as the sector's troubles spread. The New York Stock Exchange said shortly before the opening bell it would immediately suspend trading in shares of New Century Financial Corp. and move to delist the stock. The lender, which saw trading in its shares halted throughout Monday's session, on Tuesday disclosed more details on the raft of financial hurdles it faces.

Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall confirmed concerns that the sector's troubles are widespread. Without sufficient cash, the company cannot retain or sell the loans it originates.

In addition to subprime mortgage lenders, who make loans to people with poor credit, the market was worried about retailers, which the Commerce Department said eked out a meager 0.1 percent rise in sales last month.

"I think a big question mark on this is how much of this is weather-related," said Rob Lutts, chief investment officer at Cabot Money Management. "We had two or three days during the month which knocked out activity in a very significant matter ... I think it is causing a little bit of alarm short-term."

That alarm overshadowed a profit report from Goldman Sachs Group Inc. that came in well above Wall Street's forecast.

In late morning trading, the Dow Jones industrial average fell 40.45, or 0.33 percent, to 12,278.17.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 3.93, or 0.28 percent, to 1,402.67, and the Nasdaq composite index slid 9.33, or 0.39 percent, to 2,392.96.

The worries surrounding subprime lenders and sluggish retail sales drove up bond prices. The yield on the benchmark 10-year Treasury note fell to 4.51 percent from 4.56 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 92 cents to $59.83 per barrel on the New York Mercantile Exchange.

Tuesday's economic data didn't offer much support for bullish investors. The Commerce Department said sales at U.S. retailers rose 0.1 percent in February as wintry weather in much of the country kept shoppers away from stores. Investors had expected an increase of 0.3 percent from January.

Business inventories of unsold goods increased 0.2 percent in January as sales fell following the holidays. The increase was in line with expectations.

In corporate news, New Century said Tuesday that regulators subpoenaed documents under inquiries into accounting errors that inflated the value of the company's loan portfolio. The Irvine, Calif., company said the Securities and Exchange Commission and the U.S. Attorney's Office for the Central District of California began the investigations two weeks ago.

Accredited Home shares plunged $6.02, or 52.8 percent, to $5.38 after it disclosed its liquidity troubles.

Investors may pay attention to a report due later Tuesday from the Mortgage Bankers Association on mortgage delinquencies and foreclosures for the final quarter of 2006.

Investors trying to determine the breadth of the problems in the subprime sector pounced on comments from Goldman Sachs. The investment bank said strength remained in mortgages and credit products during the quarter and that while the subprime sector showed "significant weakness," the broader credit environment "remained strong." Goldman Sachs rose $4.39, or 2.2 percent, to $206.99 after posting a best-ever first-quarter profit amid strong revenue from trading and investment banking.

In other corporate news, Jo-Ann Stores Inc. jumped $3.67, or 16 percent, to $26.55 after the nation's largest fabric retailer issued a stronger-than-expected profit forecast. The stock skated past a previous 52-week high of $26.14.

Other retailers, however, fell moderately following the Commerce Department's retail sales data. Federated Department Stores Inc., parent of Macy's and Bloomingdale's, fell 19 cents to $44.75; Wal-Mart Stores Inc. slid 48 cents to $46.78; and Target Corp. fell $1.01 to $46.78.

Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 445.16 million shares.

The Russell 2000 index of smaller companies fell 4.30, or 0.54 percent, to 784.70.

Overseas, Japan's Nikkei stock average fell 0.66 percent. In afternoon trading, Britain's FTSE 100 fell 0.53 percent, Germany's DAX index fell 0.50 percent, and France's CAC-40 fell 0.59 percent.

U.S. Economy: Retail Sales Rise Less Than Forecast

March 13 (Bloomberg) -- Retail sales in the U.S. rose less than forecast as the coldest February in more than a decade kept shoppers home and added to concerns the economic slowdown will deepen.

The 0.1 percent gain, largely because of gasoline and car purchases, followed no change in the prior month, the Commerce Department said today in Washington. Sales excluding automobiles unexpectedly dropped 0.1 percent after a revised 0.2 percent gain that was smaller than previously reported.

The figures point to a gradual slowdown in consumer spending, which Federal Reserve Chairman Ben S. Bernanke has called a ``mainstay'' of the expansion. Economists at Morgan Stanley and Lehman Brothers Holdings Inc. in New York were among those that said the report may cause them to lower forecasts for first-quarter economic growth.

``This is mostly weather-related,'' said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts, the only economist in a Bloomberg News survey to forecast the drop in purchases aside from cars. ``The underlying dynamics are still decent when it comes to consumer spending. It's weaker than last year but not a lot.''

Treasury notes extended gains immediately following the report. The yield on the 10-year note fell to 4.53 percent at 10:54 a.m. in New York, from 4.55 percent late yesterday.

Inventories Rise

In a further sign of a slowdown, business inventories rose 0.2 percent in January as sales declined by the most in four months, the Commerce Department reported separately. Rising inventories may limit orders to factories in coming months, which will slow production lines, economists said.

Economists had forecast retail sales to rise 0.3 percent, according to the median estimate in a Bloomberg News survey. Forecasts ranged from a decline of 0.2 percent to a gain of 0.5 percent. Retail sales account for almost half of all consumer spending, which in turn makes up two-thirds of the economy.

Sales excluding motor vehicles and gasoline declined 0.3 percent, the most in almost three years.

An International Council of Shopping Centers report last week showed the smallest February same-store sales gain in three months due in part to the colder temperatures. Last month was the coldest February since 1994, according to the National Climatic Data Center in Asheville, North Carolina.

``It does appear that the weather was a bigger factor than we had assumed,'' said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. ``There was concern from department stores that the cold weather was keeping people out of the stores.''

Sales at clothing stores last month dropped by the most since September 2005, today's report showed. General merchandise store sales declined 0.6 percent, the most since June 2004.

Blizzards

Blizzards in the Midwest and Northeast damped sales of appliances and sporting goods last month at Wal-Mart Stores Inc. The world's biggest retailer last week said February same-store sales rose at the slowest pace since November.

Purchases at restaurants and bars, furniture, electronics and building material stores also declined last month.

Automobile dealers showed a 0.9 percent gain in sales and higher gasoline prices last month contributed to increased sales at service stations.

Consumer spending may grow at an annual rate of 3.2 percent this quarter, after a 4.2 percent pace in the previous three months, according to the median forecast of economists surveyed by Bloomberg from March 1 to March 7. David Greenlaw, chief fixed income economist at Morgan Stanley lowered his spending forecast to 3.2 percent from 3.7 percent after the report.

Spending on Average

Spending growth has averaged a 3.3 percent annual rate since 1990.

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales declined 0.2 percent in February after rising 0.3 percent. The government uses data from other sources to calculate the contribution from the three categories excluded.

``Consumer spending continues to be the mainstay of the current economic expansion,'' Bernanke said in congressional testimony last month.

Bernanke said the economy will expand at a ``moderate'' pace, with a ``reasonable possibility'' growth will strengthen during the middle of the year. He also estimates slower growth will help keep inflation contained. Fed policy makers next meet on March 20-21.

Less Unemployment

Labor market figures last week helped explain why consumers will keep shopping, economists said. Employers added 97,000 jobs in February, the unemployment rate unexpectedly fell to 4.5 percent, and hourly wages rose more than forecast, the Labor Department figures showed.

Luxury retailers such as Saks Inc. may be one area of the retail industry that benefited more than others from a jump in bonus payments early this year, economists said. The Birmingham, Alabama-based Saks, owner of the Saks Fifth Avenue chain, said February same-store sales surged 25 percent, the best monthly advance in at least six years, as it sold more spring fashions without discounts.

Q&A: Climate change plans

bbc
The government has set out plans to cut carbon dioxide emissions by more than half. But what do they involve?

What targets have been set?

Ministers want to reduce emissions of carbon dioxide - one of the "greenhouse gases" thought to contribute to global warming. They want a cut of 60% by 2050 - and of between 26% and 32% by 2020 - compared with the level measured in 1990.

Who will monitor progress?

The draft Climate Change Bill says an independent panel should be established to set the government a "carbon budget" every five years, limiting the amount of emissions the UK can produce.

Will they be legally enforceable?

If the five-yearly targets are missed, a future government could be taken to a judicial review - where a court can look at its actions and, if necessary, hand out a punishment.

How will homes and businesses be affected?

The draft bill does not stipulate how carbon dioxide emissions will be reduced, just that there have to be cuts. Ministers argue that the five-year carbon budgets will give businesses long-term guidance on what has to be done. Other government actions - for instance banning high-energy light bulbs, increasing flight duties and fining heavy-polluting industry - will help the overall targets to be achieved, it is argued.

What alternatives are there?

The draft bill acknowledges that technological advances could create more fuel-efficient transport, industry and homes, creating less carbon dioxide. The government is also calling for more investment in wave, solar and wind power. Environment Secretary David Miliband said "big decisions" needed to be taken on nuclear power.

What is the point of the UK cutting emissions by 60% when the world's biggest polluters, such as China and the USA, will not?

The government argues that by setting an example, it will be able to persuade other countries to sign up to a new global agreement when the current Kyoto agreement runs out in 2012. The EU has committed itself to a 20% reduction in greenhouse gas emissions, compared with 1990 levels. Germany has invited Brazil, China, India, Mexico and South Africa to a G8 summit at Heiligendamm in June to lay the foundations for a replacement for Kyoto.

Who opposes the UK government's plans?

Some politicians - including former Conservative Chancellor and climate change sceptic Lord Lawson - say emissions targets will hit UK business unfairly, making it uncompetitive. But ministers say they are pushing countries such as China, India and the US to follow suit. Whether they will remains to be seen.

The UK Independence Party insists the government's plan is "deeply misguided" and is demanding more investment in nuclear energy as an alternative to using fossil fuels.

What do environmental campaigners think of the plans?

Friends of the Earth said it was pleased that a new law was proposed but called for more ambitious reduction targets. Christian Aid said the eventual Climate Change Bill should demand carbon dioxide cuts of at least 80% per cent by 2050 with annual carbon budgeting "milestones". Companies trading in the UK should have to report carbon dioxide emission levels, it added.

What do opposition parties say?

The Liberal Democrats and Conservatives have both welcomed the draft Climate Change Bill as a step in the right direction but they want carbon targets to be set every year. They fear the responsibility for keeping up progress will be too easily handed from one government to the next, with five yearly targets. Ministers say annual targets would be unworkable and unmeasurable because of fluctuations in the weather and carbon dioxide levels from one year to the next.

When will the draft bill become law?

The government is to consult environmental groups and Parliament and hopes to publish a full bill by the autumn, with an act in place by Easter 2008.

Horrors of the War on Terror Make US Soldiers Go Insane

article
A new study published by the Archives of Internal Medicine shows that mental health disorders or psychosocial ills have hit a third of the US soldiers that have returned from Afghanistan or Iraq.

The study from the Archives of Internal Medicine shows that a third of all US soldiers returning from the wars in Afghanistan or Iraq have received treatments from the Veterans Affairs between 2001 and 2005 for mental illnesses or other psychosocial disorders.

Published on March 12, the study showed Veterans of Operations Enduring Freedom and Iraqi Freedom (OEF/OIF) have endured high combat stress and are eligible for 2 years of free military service–related health care through the Department of Veterans Affairs (VA) health care system. The research was conducted by scientists from the University of California, San Francisco and the San Francisco VA Medical Center on 103 788 US veterans returning from Iraq and Afghanistan, which were seen at the Department of Veterans Affairs facilities.

About 13 percent of them women, 54 percent under age 30, nearly a third minorities and nearly half veterans of the National Guard or Reserves.

US veterans separated from OEF/OIF military service and first seen at VA health care facilities between September 30, 2001 (US invasion of Afghanistan), and September 30, 2005, were included. Mental health diagnoses and psychosocial problems were assessed using International Classification of Diseases, Ninth Revision, Clinical Modification codes.

Of 103 788 OEF/OIF veterans seen at VA health care facilities, 25 658 (25%) received mental health diagnosis(es); 56% of whom had 2 or more distinct mental health diagnoses. Overall, 32 010 (31%) received mental health and/or psychosocial diagnoses. Mental health diagnoses were detected soon after the first VA clinic visit (median of 13 days), and most initial mental health diagnoses (60%) were made in nonmental health clinics, mostly primary care settings. The youngest group of OEF/OIF veterans (age 18-24 years) were at greatest risk for receiving mental health or posttraumatic stress disorder diagnoses compared with veterans 40 years or older.

Post-traumatic stress disorder (PTSD) was the most common mental health problem, affecting 13,205 vets (52 per cent of the 25,658). That accounts for more than half (52 percent) of mental health diagnoses. The disorder affects less than 4 percent of the general public. It also affects war prisoners and in a smaller proportions, their families.

There are common symptoms associated with PTSD that include: a constant reliving of the experience, dissociation and hyper vigilance. Dissociation is when connections are broken. Hyper vigilance is a feeling of being anxious or on edge all the time. Other symptoms could include difficulty concentrating, insomnia, unable to express one’s self, occupational incapacitation, paranoid reactions and aggression. When these symptoms become chronic that is when it is considered PTSD. Unfortunately many sufferers of PTSD turn to alcohol and drugs to help them cope with the symptoms. “We did see a lot of alcohol and drug abuse in veterans with PTSD following the Vietnam War,” Dr. Elspeth Cameron Ritchie, from the Department of Defense psychiatrist, said in an article published in 2003 in AllPsych Journal.

Others veterans investigated by the team of scientists shows signs of anxiety disorder (24 percent), adjustment disorder (24 percent), depression (20 percent) and substance abuse disorder (20 percent).

Post-traumatic stress disorder affected 13 percent of all veterans of Iraq or Afghanistan who received care from the VA services.

That's just a little below the average of 15.2 percent discovered in veterans of the Vietnam War, but far above the 3.5 percent reported in the general population.

Differences between genders and races were "minimal," the study said.

"Our results signal a need for improvements in the primary prevention of military service-related mental health disorders, particularly among our youngest service members," the authors warned.

"It does look like there is indeed an upward trend, and it's scary," said Dr. Karen Seal, a physician at the San Francisco Veterans Administration Medical Center and lead author of the new research. "You have a young population possibly not getting treatment for these conditions, and going on to have chronic mental illness," Seal said. "It's potentially a big public health problem."

More than a generation after 19 percent of Vietnam vets returned with PTSD, the illness generally carries less of a stigma and has better-defined standards of treatment. But many veterans and researchers say the shame of mental illness persists in military ranks, and soldiers often avoid reporting their symptoms in hopes of preserving their careers. Getting PTSD victims to acknowledge their condition is a constant challenge, Seal said — in part because the military is "a very macho culture, not one that supports being weak or crying at the pop of a balloon."

Concerning the young men and women sent to the front, the authors warned that "because they are young, they are more likely to be of lower rank and more likely to have greater combat exposure than their older active-duty counterparts."

"The mental-health toll of this war is tremendous and growing," said Rieckhoff, a former Army lieutenant who served in Iraq, in a phone interview with Bloomberg on Monday. "Untreated mental-health issues can lead to a predictable downward spiral: alcoholism,
marital problems, drug abuse, unemployment, homelessness. It is a slippery slope."

Matt Burns, a VA spokes-man, responded in an e-mail interview that "We have taken—and will continue to take—steps to make certain our veterans receive comprehensive, accessible and compassionate care for their mental-health concerns."

The VA has almost $3 billion in annual spending devoted to mental-health services, according to the statement, and the agency employs more than 9,000 psychiatrists, psychologists, and social workers.

But the mental illnesses that hit US soldiers from Iraq and Afghanistan are likely to pose problems not only to those who have to deal with them and to the state, but also to soldiers’ families.

The authors of the study conclude that the substantial proportion of ill OEF/OIF veterans seen at VA facilities requires targeted early detection and intervention in order to prevent chronic mental illness and disability.