Tuesday, September 6, 2011

Groupon, Zynga reportedly delay IPOs

Groupon Zynga

Investors may have to wait a bit longer to buy into Groupon Inc. and Zynga Inc.

The Internet darlings reportedly are delaying their initial public offerings amid the turbulence in the stock market.

Groupon and Zynga were seen as the eventual exclamation points on this year's IPO boomlet of Internet-related companies, especially social-media newcomers. But companies in a number of industries have canceled their offerings at a rapid pace over the last month as investors look askance at investments seen as risky.

Groupon, which offers daily deals over the Internet, is postponing its offering, according to Bloomberg News. Meanwhile, online gaming site Zynga may delay its IPO until early next year, CNBC reported.

Despite the jittery market, at least one company is moving forward with a hoped-for stock offering, though it would be months before its actual debut.

Private-equity firm Carlyle Group filed Tuesday for an IPO, following in the footsteps of rivals Blackstone Group and Apollo Global Management.

Not that investors should get too excited. For all their supposed Wall Street acumen, Carlyle’s private-equity brethren have been notoriously poor performers.

Blackstone sank soon after going public at $31 in June 2007, and has never neared its IPO price. It closed Tuesday at $12.50.

Apollo Global Management has slumped to $12.19 from the $19 at which it went public in March. And Fortress Investment Group, which debuted at $18.50 in early 2007, trades at $3.14 today.

RELATED:

Stocks trim losses but still finish down

Democratic lawmakers call Amazon jobs offer a political ploy

TechCrunch founder Michael Arrington issues ultimatum to AOL

-- Walter Hamilton

Retailers plan to open more stores, CB Richard Ellis reports

Rents at malls and on Main Street are low enough that a majority of retailers say they will open more stores, according to a real estate brokerage report.

Fifty-nine percent of U.S. retailers plan to expand into new locations, brokerage CB Richard Ellis reported.

The southwest, from Texas through California, was the part of the country where most retailers said they planned to grow.

“Our survey shows a significant number of retailers will be taking advantage of an opportune time for growth due to compelling rent levels -- luxury goods, wholesale clubs and discounters in particular are expected to continue to expand,” said Anthony Buono, an executive managing director at CB Richard Ellis.

Retailers have improved their financial balance sheets, closed underperforming stores, negotiated lower rents and downsized some stores, the report said.  This puts them in a much stronger position than prior to the recession. Local retailers are often still struggling but many national retailers are in a position to increase profitability as the economy and consumer spending rebound.

Expansions are planned even though the economic outlook among retailers has turned more cautious lately. Only 27% of retailers in 2011 viewed the economy as improving as compared to 35% last year. But  45% of retailers view the economy as stable compared to 35% last year, with 27% of retailers feeling that the recovery has already occurred within their market segment.

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Retail Roundup: Toys R Us, American Apparel, Sears and Costco, retail sales

California taxable sales rise in 2nd quarters of 2010 and 2011

 -- Roger Vincent

Richard Cordray vows accountability if confirmed to head agency

   Richard Cordray, nominee to head the Consumer Financial Protection Bureau

Former Ohio Attorney General Richard Cordray promised senators that he would be accountable to Congress if confirmed to be the first director of the new Consumer Financial Protection Bureau, hoping to address one of the criticisms of Republicans vowing to block any nominee until the agency's powers are scaled back.

Cordray, who was nominated by President Obama in July, also tried to ease Republican and industry concerns that the bureau would be too aggressive in taking on banks and other financial institutions, saying he would use government lawsuits "judiciously."

"I know from my own experience that lawsuits can be a very slow, wasteful and needlessly acrimonious way to resolve a problem," Cordray told the Senate Banking Committee on Tuesday in written testimony at his confirmation hearing.

Sen. Tim Johnson (D-S.D.), the committee's chairman, and other Democrats criticized Republicans for "rehashing the same debate Congress had last year" over creation of the agency as part of the sweeping overhaul of financial regulations.

“The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for that job. Instead, a vocal minority is playing games with the process and holding Mr. Cordray’s nomination hostage," Johnson said. "This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit unions at a competitive disadvantage to non-bank financial companies."

In May, 44 Senate Republicans — enough to mount a successful filibuster — vowed to block the confirmation of any nominee to head the agency unless major changes were made in its structure and that the White House argues would weaken its powers. Among the changes they want is to replace the single director with a five-member bipartisan commission and make it easier for other banking regulators to overturn the director's decisions.

"Because of the expansive jurisdiction of the bureau, every American will be affected by the director’s decisions," said Sen. Richard Shelby (R-Ala.), a leading opponent of the agency. "The director will single-handedly determine the financial products consumers can buy, as well as which consumers have access to credit, and which do not....It is staggering the amount of control the director will exert over the daily financial choices available to Americans."

The delay threatened by Republicans is significant because the bureau, which began operations under an acting director in July, can't exercise some of its broad authority without a Senate-confirmed director. Among the powers on hold are regulation of mortgage brokers, payday lenders and other largely unregulated parts of the financial system.

Cordray, 52, was one of the most aggressive state officials in taking on banks and mortgage companies after the financial crisis, and touted that experience Tuesday. He was hired last year to be the head of enforcement for the consumer bureau after narrowly losing re-election in Ohio.

"We pursued many actions against foreclosure rescue scammers who were reaching into the pockets of desperate people in an effort to steal what little remained as they sought to keep their homes," Cordray said. "And where necessary, we pursued those mortgage servicers who, despite strong warnings, repeatedly violated consumer protection laws."

And although he said he would be careful in using lawsuits, he promised to take action when necessary.

"If people are ignoring or evading consumer protections laws –- and seeking to gain an unfair advantage over their law-abiding competitors –- then litigation is an essential tool, and we will use it judiciously," he said.

Consumer and public interest groups on Tuesday called on senators to confirm Cordray's nomination.

"It’s time for Congress to set aside politics and confirm Richard Cordray so the CFPB can fully protect consumers," said Pamela Banks, senior policy counsel for Consumers Union. "Holding up this nomination may be good for the big banks and shady lenders, but not for the families whose finances are drained by high-cost loans and other unfair financial practices."

The U.S. Chamber of Commerce, however, said there were still many unanswered questions about the bureau's "unique and ill-advised structure" and urged senators to "press for stronger checks and balances" for its operation.

RELATED:

Obama's pick for consumer agency doesn't end controversy

Consumer Financial Protection Bureau to open without a director

Federal consumer protection agency launching amid lingering controversy

Senate Republicans vow to block any appointee to head consumer protection bureau

-- Jim Puzzanghera

Photo: President Obama introduces Richard Cordray as his nominee to head the Consumer Financial Protection Bureau in July. Credit: Associated Press.

 

Stocks trim losses but still finish down

WallSt1-Stan Honda-Getty Images

A late-afternoon rally helped U.S. stocks trim their losses Tuesday, but the Dow Jones industrial average nevertheless suffered a triple-digit decline for the third consecutive day.

Ongoing concern about the European debt crisis weighed on U.S. financial markets, driving the yield on the 10-year Treasury note to 1.98%, another fresh low.

The Dow dropped 100.96 points, or 0.9%, to 11,139.30. The Standard & Poor’s 500 index fell 8.73 points, or 0.7%, to 1,165.24.

The Dow was off more than 300 points at its low before reclaiming part of its losses. Nonetheless, it's still down 474 points, or 4.1%, in the past three trading sessions.

Stocks slipped despite a private report showing the U.S. service sector growing faster than expected last month.

RELATED:

Stocks fall on European fears

Stocks fall in eurozone as U.S. jobs report adds to investor worries

Asian shares tumble on grim U.S. jobs report

-- Walter Hamilton

Photo: A Wall Street sign in New York. Credit: Stan Honda/Getty Images

Spending on hotel improvements is on the rise

 

Bonaventureimprovements

 

After a two-year drop in spending, hotel owners across the country are beginning to invest again in  improvements, according to a new study released Tuesday.

The U.S. lodging industry is expected to spend about $3.5 billion on hotel improvements and expansions, a 30% increase from 2010, according to a study by Bjorn Hanson, a dean at New York University's Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

As demand for hotels dropped sharply during the economic downturn, hotel owners cut back on capital investments. In 2009, hotel owners spent $3.3 billion on improvements and expansions, a 40% drop from the previous year, according to Hanson's report. In 2010, capital spending dropped an additional 18% to $2.7 billion, according to the report.

Hanson based his forecast on interviews with hotel executives, management companies and design and construction representatives, among other sources.

-- Hugo Martin

Photo: Ivan Hernandez works on a wall in a ballroom at the Westin Bonaventure Hotel in downtown Los Angeles during a renovation project in December 2010. Credit: Los Angeles Times)

Democratic lawmakers call Amazon jobs offer a political ploy

Amazon phoenix ross de franklin AP

As the annual legislative session headed into its last four days, top Democrats denounced Internet retailer Amazon.com's offer to create thousands of new jobs if an effort to force it to collect sales tax on California purchases is postponed two years.

At a state Capitol news conference Tuesday, legislators and their brick-and-mortar-store allies cast doubt that Amazon would follow through with a promise to hire up to 7,000 people at two proposed California distribution centers. The company, which has a total workforce of 38,000, has made similar promises in other states that also are trying to force Amazon to collect sales taxes, they said.

"More jobs will ultimately be created in California when we have a tax system that is fairly and adequately applied to everyone in our state," said Assembly Speaker John Perez (D-Los Angeles). "And we're not going to allow the notion of jobs that may or may not materialize dictate our position on an issue of fundamental fairness to all businesses in California."

Amazon, said Assembly Rules Committee Chairman Nancy Skinner (D-Berkeley), is "cynically promising jobs that aren't going to materialize."

California has lost about 18,000 jobs because of unfair competition from Amazon and other Internet sellers that don't pay sales tax and offer lower prices, said Bill Dombrowski, president of the California Retailers Assn. Many more jobs will disappear in coming years if Amazon retains an unfair competitive advantage, he said.

A spokesman for Amazon's "More Jobs Not Taxes" campaign, which is gathering signatures to try to repeal a new California Internet sales tax law, did not respond to requests for comment on the criticism. The company has refused to comply with a California sales tax collection law that took effect July 1, calling it unconstitutional.

The Amazon-backed campaign, however, is close to turning in enough signatures on referendum petitions to qualify for the June 2012 ballot.

In the meantime, Democrats in both the Senate and Assembly and dozens of lobbyists hired by big-box retailers are working overtime to convince a handful of Republican members to vote for a bill that would nullify the Amazon referendum if signed into law by the governor.

The Democrats need bipartisan support from at least two-thirds of the membership of the two houses.

"I think we're close on the votes," said Assemblyman Charles Calderon (D-Whittier). A first attempt to find the needed votes could happen as early as today, he said. If the votes aren't there initially, more attempts will be made before the scheduled midnight Friday legislative recess.

Meanwhile, a trade group that represents Internet site operators, who previously earned commissions from Amazon, complained that they are having a hard time surviving since Amazon cancelled their contracts rather than follow the new California law.

Keeping the so-called affiliates would have made Amazon directly liable to collect sales taxes under the California statute.

According to a survey conducted by the Performance Marketing Assn., 37% of such affiliates have lost more than half of their income; 22% went out of business and 32% said they have left or are planning to leave California.

RELATED:

Amazon's offer in California sales tax fight gets tepid response

Amazon offers to build facilities in bid to end sales tax fight

California lawmakers try to head off Amazon sales tax referendum

Photo: Amazon distribution center in Phoenix. Credit: Ross D. Franklin/Associated Press

-- Marc Lifsher

 

U.S. exports more fuel, keeping gasoline prices high

gas prices Oil prices are still far below their highs for the year, but U.S. motorists aren't benefiting from lower prices because the nation's refineries continue to boost exports and reduce supplies available in the U.S.

In California, the average price of a gallon of regular gasoline jumped 12.1 cents a gallon in just the last week, to $3.941, according to the AAA Fuel Gauge Report. That's also 89 cents a gallon higher than the price a year ago.

Nationally, the AAA said, the average price climbed 4.8 cents a gallon to $3.66 over the last week -- 97.7 cents higher than the same day in 2010.

"The U.S. petroleum balance of trade continues to shift in a 'sea change' that is both literal and figurative. For the tenth week in a row, Energy Department numbers show that the country exported considerably more refined products cargoes than were imported," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Much of the refined product involved in the exports is diesel, Kloza said, meaning that refineries are opting to devote more of their attention to that fuel at the expense of gasoline. The customers are mostly in Central America and South America.

"Notwithstanding disappointing U.S. demand, the worldwide merchant demand for U.S.-produced fuel is strong," Kloza said.

Five years ago, U.S. imports of refined fuels outpaced exports by a 3 million barrels a day, according to Energy Department statistics. Two years ago, fuel imports into the U.S. were still outpacing exports by 1.5 million barrels a day.

No longer.

The most recent statistics show exports of refined products from the U.S. outpacing imports by 476,000 barrels a day.

"That figure is a new modern-day record. We are a net exporter now. If not for high prices in the U.S., it would be something to cheer about in terms of helping the deficit. But in the U.S., it's just going to get under people's skin. It's like we're selling off our birthright," Kloza said.

In other energy news, U.S. benchmark West Texas Intermediate crude oil for October delivery tumbled $2.04 to $84.41 a barrel during trading on the New York Mercantile Exchange. Prices have fallen 7.6% so far in 2011. The European benchmark, Brent North Sea crude, rose $1.07 to $111.15 a barrel on the ICE Futures Exchange in London.

ALSO:

Libyan oil situation remains uncertain

Stocks falls as Europe worries deepen 

-- Ronald D. White

Image: A graphic tracks the AAA's rolling 12-month average price for a gallon of regular gasoline. Credit: AAA

FDA takes closer look at gluten-free labels

Grocery Shopper 
The federal Food and Drug Administration is taking a closer look at how gluten-free products are being labeled and is weighing stricter standards.

The agency has reopened the comment period, which will last through this month, for its 2007 proposal about labeling foods as “gluten-free.” One of the issues the FDA is proposing is that foods labeled as “gluten-free” can’t contain 20 parts per million or more gluten.

The agency is reexamining the issue because, back in 2007, it was difficult to scientifically validate such levels of gluten using the methods and techniques that then were available. Now, according to the agency, technology has advanced and such detections are available.

Such labels are key to people who have celiac disease, which means their bodies can’t tolerate gluten, a protein found in wheat, rye and barley. Celiac disease damages the small intestine and interferes with absorption of nutrients from food, according to the FDA.
 
“Before finalizing our gluten-free definition, we want up-to-date input from affected consumers, the food industry, and others to help assure that the label strikes the right balance,” Michael Taylor, FDA deputy commissioner for foods, said in a statement. “We must take into account the need to protect individuals with celiac disease from adverse health consequences while ensuring that food manufacturers can meet the needs of consumers by producing a wide variety of gluten-free foods.”

To comment on the issue, click here and follow the directions.

This public discussion is happening as the FDA reportedly is also proposing to revamp food labels in general.

The proposal, among other things, would offer a clearer (and more realistic) definition of a serving size -- because really, how many people look at a 20-oz. bottle of soda and see 2.5 servings? -- and place more of the label’s focus on calories than on carbohydrates or proteins.

The quest to create a better, clearer label on food products -- and therefore help Americans make better food choices and combat obesity -- has been an ongoing effort by federal officials for eight years. While the FDA has said the proposal wouldn’t be a massive overhaul, officials reportedly have said they want food labels to be more useful for Americans when shopping or eating out.

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-- P.J. Huffstutter

Photo: A shopper in a Florida grocery store. Credit: Joe Raedle / Getty Images

Consumer Confidential: Nominee to head new agency on hot seat

Here's your to-infinity-and-beyond Tuesday roundup of consumer news from around the Web:

--He may not be Elizabeth Warren, but President Obama's nominee to head the new Consumer Financial Protection Bureau is promising to play ball with Congress and not be too rough with banks. Even so, Richard Cordray's chances of winning Senate approval to lead the agency remained uncertain. Republicans have promised to block any nominee to head the agency unless the bureau is changed in ways they say will make it more accountable. Democrats say those changes would weaken its powers. In remarks prepared for his confirmation hearing Tuesday with the Senate Banking Committee, Cordray said his experience as former Ohio attorney general taught him that litigation can be slow, costly and unnecessarily acrimonious. He said he would use lawsuits "judiciously," and noted that the bureau has other powers to resolve problems, including issuing rules, writing reports and examining large banks and many nonbank institutions.

--The problem with China is that the country just isn't caffeinated enough. Luckily, Starbucks is stepping up to remedy that situation. The company plans to triple its coffee shops in China during the next four years and step up expansion elsewhere in Asia. Starbucks plans to operate 1,500 outlets in China by 2015 from a current 470, according to the company's Asia Pacific president, Jinlong Wang. The company also expects to open 700 coffee shops in South Korea by 2016, up from 370 now, Wang said. "The coffee industry in China has huge potential," Wang told reporters in Singapore. "China has 5,000 years as a tea-drinking country, but we've created a new coffee culture." Starbucks said in July that revenue from its international business rose 20% in the April-June quarter from a year earlier and accounted for 23% of overall sales of $2.93 billion.

-- David Lazarus

 

U.S. exports more refined fuel, keeping domestic prices high

gas prices Oil prices are still far below their highs for the year, but U.S. motorists aren't benefiting from lower prices because the nation's refineries continue to boost exports and reduce supplies available in the U.S.

In California, the average price of a gallon of regular gasoline jumped 12.1 cents a gallon in just the last week, to $3.941, according to the AAA Fuel Gauge Report. That's also 89 cents a gallon higher than the price a year ago.

Nationally, the AAA said, the average price climbed 4.8 cents a gallon to $3.66 over the last week -- 97.7 cents higher than the same day in 2010.

"The U.S. petroleum balance of trade continues to shift in a 'sea change' that is both literal and figurative. For the tenth week in a row, Energy Department numbers show that the country exported considerably more refined products cargoes than were imported," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Much of the refined product involved in the exports is diesel, Kloza said, meaning that refineries are opting to devote more of their attention to that fuel at the expense of gasoline. The customers are mostly in Central America and South America.

"Notwithstanding disappointing U.S. demand, the worldwide merchant demand for U.S.-produced fuel is strong," Kloza said.

Five years ago, U.S. imports of refined fuels outpaced exports by a 3 million barrels a day, according to Energy Department statistics. Two years ago, fuel imports into the U.S. were still outpacing exports by 1.5 million barrels a day.

No longer.

The most recent statistics show exports of refined products from the U.S. outpacing imports by 476,000 barrels a day.

"That figure is a new modern-day record. We are a net exporter now. If not for high prices in the U.S., it would be something to cheer about in terms of helping the deficit. But in the U.S., it's just going to get under people's skin. It's like we're selling off our birthright," Kloza said.

In other energy news, U.S. benchmark West Texas Intermediate crude oil for October delivery tumbled $2.04 to $84.41 a barrel during trading on the New York Mercantile Exchange. Prices have fallen 7.6% so far in 2011. The European benchmark, Brent North Sea crude, rose $1.07 to $111.15 a barrel on the ICE Futures Exchange in London.

ALSO:

Libyan oil situation remains uncertain

Stocks falls as Europe worries deepen 

-- Ronald D. White

Image: A graphic tracks the AAA's rolling 12-month average price for a gallon of regular gasoline. Credit: AAA

Osborne will not and should not change course


George OSborne: not for turning. (Photo: Getty)

George OSborne: not for turning. (Photo: Getty)


Over the past week, the background noise of the usual suspects calling for a “Plan B” – repeated so often and so monotonously that there should be some “white noise” device that can blot it out – has received apparent support from some unlikely sources.  Bill Gross, chairman of Pimco has been widely quoted calling for a “course correction” – though fewer have noted that he said explicitly that he was not looking for a U-turn but instead a mild adjustment.  And he didn’t set out what that mild adjustment might actually be – temporary tax cuts, perhaps?  The Wall Street Journal has proclaimed that “Osborne Can’t Avoid a Change of Course“.


Osborne however, takes the opposite view, including today with his speech to the Lloyds of London dinner.  He says that the Coalition deficit reduction plan was made for good times as well as bad, and points out that it was set at a time and in a form of the government’s own choosing, last summer, rather than being forced upon it by the markets as plans in Italy, France, Spain and Greece have been this summer.  He alluded to the downgrade in the UK’s growth forecasts that the Office for Budget Responsibility has already signalled, but claims that will not force him to change direction.


He’s right, by and large.  It is of huge benefit to Britain that we have set about a credible deficit reduction plan in advance, and as a consequence the amount and pace of the cuts are less than would have been necessary had we taken the advice of those that urged against reducing the deficit.  If the government had listened to Ed Balls and his supporters, the likely consequence would have been faster and deeper cuts to the deficit, forced upon us by markets in a panic.  Deficit cuts forced on us under those circumstances would probably also have involved larger tax rises.  Since tax rises tend to damage growth, at least in the short term – the tax rises in the Coalition’s plan are politically necessary, to give us a sense that we are “all in this together”, not economically desirable – if we had been forced into precipitate tax rises under market pressure, the likely consequence would have been recession.  Also, of course, one of the manifestations of the market losing confidence in the British government would have been a large rise in gilt yields.  That would have made investment more expensive, damaging growth even further.


The government’s path is the pro-growth one.  Spending is cut, which will raise the long-term growth rate of the economy, allowing consumers to pay their debts, reducing the risk of banking collapse and allowing more spending in the short term.  The deficit is cut, reducing the risk of sudden large rises in interest rates and precipitate tax rises forced by market pressure.


Just because Osborne’s plan is pro-growth doesn’t, of course, mean that growth will be rapid.  It just means we get more growth (or less recession) than we would have done under the Ed Balls course.  The economy was in a dire state by 2010.  As pointed out in a paper released by the Bank of International Settlements last week, by 2010 Britain’s debt levels on all metrics – government debt; corporate sector debt; household debt – were above the levels expected to damage growth over the medium term.  In addition, government spending had risen from just over two fifths of the economy only three years before to around half the economy – again, damaging growth.  Public sector productivity growth has been dire – indeed, negative on some metrics, dragging the economy down.  The demographic challenges of an ageing population had been ignored for far too long with retirement ages raised far too slowly, meaning that the economy was projected to have an ever-smaller proportion working carrying the load of an every-larger proportion of retirees.


Such challenges have meant that the sustainable growth rate of the economy – more traditionally thought of as around 2.5 percent for the UK – may have fallen to perhaps only 1.7 percent.  The government planned its deficit reduction programme on the basis that the sustainable growth rate had fallen only a little – to 2.1-2.35 percent out to 2015/16.  That could well be optimistic.  If it is, then Osborne won’t meet his deficit reduction targets as hoped.


But how would this be helped by a Plan B?  Plan B is to deny that the economy can only grow slower.  It is to pretend that all we have are some temporary problems that we can thrust through by borrowing which can then be paid back from faster growth later.  But if the real problem with meeting the growth and deficit-reduction targets is that the economy just can’t grow as fast as the government hopes over the medium-term, then borrowing even more will make that worse, not better.  More borrowing will increase the structural deficit further, and will damage growth more – even if it doesn’t lead to the sort of crisis seen elsewhere.


Osborne should stick to his course.  His only correction should be to try to get there faster, if he can.  That is to say, if the economy slows further, we should not slow the pace of or reduce the depth of spending cuts.  Instead, we should cut more and cut faster.


Cut early; cut deep.  That is the way to maintain market confidence, it is the way for the Coalition to deliver on its promises, and it is the way to deliver growth.



Stocks fall on European fears

New York Stock Exchange
Growing worries about Europe's debt crisis sent U.S. stock markets down on Tuesday morning.

The declines came after a weekend of turmoil that sent many European markets down more than 5% on Monday, when U.S. exchanges were closed. On Tuesday, leading indexes were down 1% in Spain and 0.6% in Germany.   

In early trading Tuesday, the Dow Jones industrial average was down 212.59 points, or 1.9%, to 11,027.67.

Indexes briefly reclaimed some of their early losses when a report released at 7 a.m. EDT showed that non-manufacturing businesses were expanding in August more than economists expected and more than a month earlier. The Institute for Supply Management's index of non-manufacturing businesses rose to 53.3 on a scale in which anything above 50 indicates expansion.

But that was not enough to counter signs that European leaders may not be able to contain the damage from economic problems in the continent's weaker countries, such as Italy and Greece. Both countries have struggled to implement austerity plans that could help them to rein in ballooning debt.

RELATED:

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-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Spencer Platt / Getty Images

Consumer Reports says many celebrity food brands are just average

Emeril Just because a jar of tomato sauce bears a celebrity’s smiling face doesn’t mean it’ll taste any better than cheaper brands, according to Consumer Reports.

Out of 26 star-backed products the testing agency submitted to a taste test, just three were rated as “excellent” and 10 as “very good.” Half were only average.

Consumer Reports looked at products from TV chefs, popular restaurants and major Hollywood names. Though many items tended to cost double or triple the amount of competitors, their quality was often on par with less-pedigreed national brands such as Campbell’s, Kraft and Progresso.

The top-rated products were Giada De Laurentiis’ tomato basil pasta sauce, Mario Batali’s marinara sauce, and Wolfgang Puck’s tomato basil bisque -- which tended to use better ingredients such as fresh produce and sea salt.

But other items, such as marinara sauces from Emeril Lagasse and Paul Newman, use tomato puree and powdered or dried garlic. 

“Don’t be starstruck,” said Tod Marks, senior project editor at Consumer Reports, which released the results in its magazine Tuesday. 

RELATED:

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-- Tiffany Hsu

Photo: Chef Emeril Lagasse, whose home-style marinara was rated below Ragu's. Credit: Alex Brandon / Associated Press

Honda recalls CR-V crossover and CR-Z hybrid models

Fit
Honda Motor Co. will recall about 1 million cars worldwide, including almost 100,000 in the United States.

The massive recall includes 80,111 CR-V sport-utility vehicles from the 2006 model year in the U.S. to replace the power window master switch.

The automaker said the design of the switch can allow residue from interior cleaners to accumulate.  That can cause the electrical contacts to degrade and start a fire. No injuries or deaths have been reported related to this condition.

Honda will also call back 5,626 CR-Z small hybrids from the 2011 model year in the U.S. The cars subject to the recall are equipped with manual transmissions and require an update to the software that controls the hybrid electric motor.

Honda said it wants to fix a problem that can cause the car to roll backward unexpectedly.

Honda said that when the gasoline engine has stalled with the battery in a very low state of charge and the transmission in gear, the electric motor might rotate in the direction opposite to that selected by the transmission. If this occurs and the driver has not engaged the brakes, the vehicle may slowly roll backward when the transmission is in a forward gear (or forward if the car is in reverse), potentially leading to a crash.

A software update will add further controls to correct the problem. No injuries or deaths have been reported related to this condition.

Owners of the vehicles will be notified of the recalls later this month.

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Dealer doc fees going up

Consumer guide to electric vehicles

-- Jerry Hirsch
Twitter.com/LATimesJerry

Photo: A 2006 Honda CR-V: Credit: Honda Motor Co.


 

Study finds 41% of small businesses plan to hire in next 6 months

Hisam's African Urban Wear
About 41% of small businesses plan to hire in the next six months, more than the 38% that don't plan to add jobs, according to a study released Tuesday by Pepperdine University.

The 7,502 small businesses surveyed as part of Pepperdine Private Capital Markets Project also ranked economic uncertainty as the top issue facing their sector. About 38% cited that as the biggest problem, followed by access to capital (26%) and government regulations and taxes (24%).

Uncertainty was evident in the findings as 21.2% of the small businesses said they didn't know if they would hire over the next six months.

“Small businesses should be a top consideration as the president and other legislators seek to jump-start job creation,” said John Paglia, an associate finance professor at Pepperdine’s Graziadio School of Business and Management and the lead researcher for the project.  “Establishing market confidence, improving access to capital and improving regulatory and tax structures are the most direct route to end the Great Recession and spark the Great Recovery.”

The survey defined small businesses as those with annual revenue of less than $5 million. With President Obama set to give a major jobs speech Thursday, the owners of those small businesses ranked increasing access to capital as the best thing policymakers could do to spur more job creation next year. 

About 35% of small businesses placed that as the top priority, followed by tax incentives (23%) and regulatory reform (18%).

RELATED:

Congress returns, and so does the partisan budget war

Many retail industry analysts predict a good holiday season

White House forecasts high unemployment through 2012

 -- Jim Puzzanghera

Photo: Harold Ingram, owner of Hisam's clothing and gift shop on Degnan Boulevard in the Village at Leimert Park, in front of his store in April. Credit: Mel Melcon/Los Angeles Times

Should Democrats Play by Republican Rules?

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul.

It’s the nature of complex phenomena to have multiple causes and origins. It’s simplistic to say that a war, revolution or economic collapse can be explained by a single factor. It’s the job of analysts to sift among potential sources, assign weights to particular ones and thus try to understand the nature of such phenomena.

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Perspectives from expert contributors.

For momentous developments like the fall of Rome or the Industrial Revolution, the analysis may literally go on forever, with our understanding continually reshaped by subsequent history and perspective.

Perspectives from expert contributors.

However, in real time, we don’t have the luxury of waiting until a consensus or even a dominant view has developed. In fact, we often don’t have time to do anything except rely on gut instincts derived from experience, theory, conjecture, ideology and a wide variety of other influences.

For those who lack the time, knowledge or education to think deeply about events as they happen, political parties and movements provide predigested ideas, perspectives and remedies.

Unfortunately, people are sometimes led astray by those they trust for insights, information and solutions to problems. This may result from corruption or mendacity, rigidity of thought, simple error or ignorance. And it’s human nature for people and organizations to be reluctant to acknowledge mistakes and to have an almost unlimited capacity to rationalize and force facts and theories to conform to their self-interest.

In the case of the Great Recession or mini-depression that we have been experiencing for almost four years, the best economists in the country are still divided on its cause and cure. It’s not an exaggeration to say that they are deeply polarized, with virtually no overlap among the competing camps in terms of analysis or remedies.

At the risk of oversimplification, one side sees government as the cause of all that has gone wrong in the economy and therefore believes that scaling back government intervention is necessary to improve the situation. That means reducing taxes, deregulation and spending cuts.

The other side thinks that the complex causes for the crisis are not necessarily related to the required response, which can be determined by examining the facts of the situation — high unemployment, nonexistent inflation and extraordinarily low interest rates, among other things.

This camp believes that the problems created by the crisis can be addressed by monetary and fiscal policy — much the way a doctor may save an ill patient by aggressively treating his symptoms even without knowing the precise cause of the ailment.

In broad terms, these dueling perspectives happen to conform to the basic philosophies of the two major parties. Republicans are predisposed to blame government for every problem regardless of the circumstances, and Democrats tend to view government as necessary to deal with economic and social problems.

One reason people join political parties is to save themselves the time and work of researching and thinking about issues. They are too busy with their jobs, their families and all the other things that occupy the time and attention of average people.

And even in the Internet age, it is hard to find the information and analysis necessary to make informed decisions about public policy. It’s vastly easier to just accept one party’s perspective and assume it is correct.

What parties and movements do when an issue comes along that requires them to take a position or presents opportunities to advance their agenda is to sort the possible causes and prospective cures put forward into those that are sympathetic to their program and philosophy and those that are not. Those that are sympathetic are deemed to be correct; those in conflict are deemed incorrect.

Obviously, there are serious problems with this approach, which members of both parties follow. Mistakes are easily made and incorrect positions established that may make matters worse rather than better. These positions may be held so dogmatically that their supporters feel that coercion is justified in forcing people to accept their point of view or that violence is an appropriate response to resist policies whose validity they question.

Thankfully, elections and democracy offer peaceful methods for resolving political conflict. And historically a sufficiently large number of Americans have been willing to withhold judgment until the facts are determined with some degree of certainty, and to be persuaded by logic and evidence, rather than immediately aligning themselves with a particular ideological or partisan political approach.

But without correct information and good leadership, it may not be possible for the rational, reality-based community to exercise influence, and control will necessarily default to one of the extremes.

Right now, it is clear that the right side of the political spectrum is dominant. Virtually all policy debate these days is based on the premise that the conservative position is at least valid. For example, we have heard for months from Republicans that government regulation is a major, if not the primary, factor holding back economic expansion and employment growth.

Just last week, the House majority leader, Eric Cantor of Virginia, posted a memo to House Republicans detailing specific regulations whose repeal would create jobs.

Mr. Cantor offered no analysis or evidence that abolishing these regulations would do anything to raise real growth of the gross domestic product or to reduce unemployment. The Republicans to whom the memo was addressed don’t need any evidence, because they are predisposed to believe that government regulation always holds back economic growth and job creation. That’s why they became Republicans in the first place.

So overwhelming is the Republican view that on Friday President Obama withdrew an Environmental Protection Agency regulation, widely supported by scientists as essential to air quality, because its economic burden is deemed to be unaffordable at this time.

Of course, we can’t be sure whether the regulation would have reduced jobs or if its withdrawal will lead to illnesses by people who would have otherwise remained in good health. All we know is that in the cost-benefit calculation, Mr. Obama considered the costs to be decisive.

His supporters will argue that Mr. Obama made the right call based on the facts of the case, but no doubt political factors also weighed on his decision. And those factors have been heavily shaped by the reality that much of the public has been swayed by the oft-repeated Republican charge that government is the enemy of progress.

In a courtroom, justice requires that both sides be equally well represented. If one doesn’t do its job properly, the jury cannot be blamed for a wrong result. If Democrats are going to accept Republican premises, they shouldn’t be surprised if a majority of people eventually conclude that Republicans ought to be in charge of government policy.

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