California bond sale draws relatively light demand on first day

Individual investors on Monday placed orders for about 14% of a $1.8-billion sale of tax-free bonds by California, a relatively low turnout for a state debt sale.

Treasurer Bill Lockyer said the state’s brokerage network took in $250 million in orders on the first day of a two-day retail sale period, when the state gives preference to individuals over institutions.

By contrast, Lockyer had $459 million in orders on the first day of last month’s bond sale. That was about 18% of the total offering of $2.5 billion in securities.

The state took in a lower level of orders this time around despite offering significantly higher interest rates on the bonds than at last month’s sale, which was the first offering of 2011.

As bond yields in general have rebounded over the last month, the state was offering a preliminary yield of 2.10% on the five-year bonds in its latest sale, up from 1.61% in the September deal.

The 10-year bonds in the latest sale were offered at a preliminary yield of 3.51%, up from 3.17% at the last sale.

The bonds, known as general obligation issues, are being sold in maturities of three to 30 years.  Interest on the securities is exempt from state and federal income tax for California residents, so the returns can be worth substantially more than similar fully taxable yields, depending on an investor’s tax bracket.

 “We’ve got another day to go. Let’s see where we’re at when it’s all over,” said Tom Dresslar, a spokesman for Lockyer, when asked about Monday’s order level.

California has the lowest credit rating of any state, reflecting the weak economy and the state’s history of budget struggles, but that has been the case for years. The bonds are rated A1 by Moody’s Investors Service and A- by Standard & Poor’s. Those ratings are considered “upper medium grade.”

Proceeds from the bonds will finance a backlog of voter-approved infrastructure projects.

Individual investors can submit orders for the bonds through Tuesday. Orders must be placed with brokers; the state doesn’t sell its bonds directly to investors.

Institutional investors will bid for the remaining bonds on Wednesday, which is when the final yields will be set. Individual investors who don’t like the final yields can cancel their orders.

The bonds are sold in minimum blocks of $5,000. For more information on the sale, go to Lockyer’s website, buycaliforniabonds.

RELATED:

California plans $2-billion bond sale amid rising yields

California sells out $5.4-billion short-term note sale

California sells $2.4 billion in bonds as yields fall

Investing: Is the bond market at a crossroads?

-- Tom Petruno

Follow me on Twitter: Twitter.com/tpetruno

Pentagon, NASA open space launch missions to private ventures [Updated]

The U.S. government has taken the first steps toward opening up the competition to launch its national security satellites into outer space.

The Air Force, NASA and the National Reconnaissance Office -- the secretive federal umbrella agency that operates spy satellites -- have signed an agreement to establish clear criteria for private rocket builders to launch their pricey payloads, which include $1-billion spy satellite and robotic missions.

United Launch Alliance, a joint venture of aerospace behemoths Lockheed Martin Corp. and Boeing Co., is currently the Pentagon’s sole launch provider for such missions. The new agreement could break the company’s virtual monopoly on the launches and give opportunities to smaller start-ups, such as Hawthorne-based Space Exploration Technologies Corp.

The company, better known as SpaceX, has repeatedly contended that it can provide rockets at a fraction of of its competitors' prices. For example, SpaceX said launches on its Falcon Heavy would cost  $80 million to $125 million. This is half the cost of United Launch Alliance’s similar-sized Delta IV Heavy rocket, which can run around $250 million, according to the Federal Aviation Administration’s most recent estimate.

Elon Musk, SpaceX’s chief executive, has publicly criticized the Pentagon for not allowing competition with United Launch Alliance. But now -- at a time when all aspects of federal spending are under scrutiny -- his sales pitch has resonated with the government.

“Fair and open competition for commercial launch providers is an essential element of protecting taxpayer dollars,” he said in a statement that commended the move.

But SpaceX has yet to build the Falcon Heavy. It is still in development. That didn’t stop the company from breaking ground in July on a $30-million launchpad at Vandenberg Air Force Base, located northwest of Santa Barbara.

Situated along the Pacific Ocean, Vandenberg has primarily been used for launching spy satellites since the beginning of the Cold War because its location is considered ideal for putting satellites into a north-south orbit.

There still isn’t a guarantee that SpaceX or other rocket makers will win those contracts, but the government's announcement gives the company an opening. To win, SpaceX and other rocket makers must first meet detailed technical requirements and have several successful launches under their belts.

“This strategy is the best balance of ensuring reliable access to space while encouraging competition and innovation in the launch industry,” Erin Conaton, undersecretary of the Air Force, said in a statement. “We are committed to providing a level playing field to all competitors in the interest of ensuring the best capability for our war fighters and the best value to the American public.”

RELATED:

SpaceX says it's developing the first fully reusable rocket

SpaceX is making $30-million bet on rocket at Vandenberg

Boeing 787 Dreamliner the first of a new generation of aircraft

-- W.J. Hennigan

twitter.com/wjhenn

Photo: United Launch Alliance's Delta IV Heavy rocket rises from a launch pad at Vandenberg Air Force Base in January. The rocket was carrying a spy satellite for the National Reconnaissance Office. Credit: Bryan Walton / Associated Press/Santa Maria Times

Unhealthy, overweight Americans cost $153 billion in lost work

Full-time workers in the U.S. who are overweight or obese and have chronic health problems such as high blood pressure or asthma cause $153 billion in lost productivity each year, according to a new Gallup poll.

That’s nearly four times the amount reported in Britain, according to the report, which found that such Americans have 450 million more days of of absenteeism than their healthy colleagues.

More than 68% of all U.S. workers, regardless of weight, have at least one chronic condition such as diabetes or depression, according to Gallup. Healthy Americans of normal weight make up less than 14% of the population and take about four sick days a year.

The rest of the 109,875 workers surveyed from Jan. 2 to Oct. 2 were overweight, obese and/or suffering from an ongoing health issue.

About 18% of U.S. workers are overweight or obese and saddled with three or more health conditions -- costing $81 billion in lost work over the 42 sick days each takes on average every year, according to Gallup.

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Lawsuit: 'Biggest Loser' salad dressing not as healthy as advertised

Consumer Confidential: Vacations in peril, Verizon data caps, obesity crisis solved

 -- Tiffany Hsu

Photo credit: Brian Vander Brug / Los Angeles Times

Orbitz fined $60,000 for failing to disclose taxes and fees [Updated]

 The Department of Transportation fined the Orbitz travel website $60,000 for violating federal laws that require travel sites to clearly disclose taxes and fees on airfares.

The federal agency said that during a period in early 2011, the Orbitz home page advertised air fares without disclosing that passengers must pay extra fees and taxes for the airline tickets.

“Consumers have a right to know the full price they will be paying for airfares,” U.S. Transportation Secretary Ray LaHood said. “We established airline price advertising rules to protect the consumer and will take enforcement action when these rules are violated.”

An Orbitz spokeswoman said that a glitch that resulted in fares being displayed without the prominent link to fees and taxes for a short period of time has been addressed, and that Orbitz is in compliance with the Department of Transportation.

According to the Department of Transportation, Orbitz customers were not notified of the additional charges until they followed the link to another page and scrolled to the bottom, where the information about taxes and fees was included in fine print.

Also, customers who selected discounted fares on Orbitz found that these fares were no longer available, and they were instead taken to a page where a different fare was displayed, the federal agency said.

Under federal laws, online travel sites must disclose separate taxes and fees through a prominent link next to the fare, and the link must take the viewer directly to information where the type and amount of taxes and fees are displayed. In addition, the law says that the sites must offer a reasonable number of seats for an advertised fare. The rules apply to ticket agents as well as airlines.

[Updated at 3:24 p.m.: An earlier version of this post said an Orbitz spokesperson could not be reached for comment. A response from a company representative is included in this updated version.]

RELATED:

Korean Air launches A380 from Los Angeles

Spending on business travel expected to slow in 2012

American Airlines will cut its capacity and retire 11 planes

 -- Hugo Martin

Image: Orbitz website

Virgin Galactic moves into New Mexico spaceport

Las Cruces, N.M., officially joined the list of the nation’s major space centers Monday when a newly completed terminal and hangar facility was turned over to British billionaire Richard Branson and his commercial space tourism venture, Virgin Galactic.

The company aims to launch paying customers beyond Earth’s confines from the new $209-million futuristic-looking facility, named Spaceport America.

New Mexico Gov. Susana Martinez joined Branson and a crowd of more than 800 others during the dedication ceremonies.

“Today is another history-making day for Virgin Galactic,” Branson said at the event. “We are here with a group of incredible people who are helping us lead the way in creating one of the most important new industrial sectors of the 21st century.”

Virgin Galactic said it has taken about 455 reservations for the ride. The price per flight for a would-be space tourist is $200,000.

Instead of launching people directly into space with a rocket, Virgin Galactic plans to do the following: A rocket plane with six passengers will be attached to the wings of a White Knight mother ship, flown to 50,000 feet and released. The rocket plane's engine then will ignite and propel the passengers into suborbit.

The spaceship is designed to climb to the edge of space, about 60 miles above the Earth's surface. At that suborbital altitude, people experience weightlessness and see the curvature of the Earth.

Virgin Galactic’s sleek carrier aircraft and spaceships are made by the Spaceship Co. in Mojave, where the planes are currently undergoing test flights. Branson hopes to make its first passenger flight with his adult children, Sam and Holly, as soon as next year.

At the end of Monday’s event, the Branson trio --after rappelling down the side of the Spaceport’s massive glass windows -- named one of the ground terminals the Virgin Galactic Gateway to Space.

The gateway will house preparation facilities for company’s passengers, which it calls astronauts. There is also a mission control center and an area for friends and family.

RELATED:

Virgin Galactic signs deal to give NASA rides into space

Firm completes spacecraft factory in Mojave

Virgin Galactic makes first feathered flight over Mojave [Video]

-- W.J. Hennigan

twitter.com/wjhenn

Photo: Dancers with Project Bandaloop, based in San Francisico, hang and dance on the side window wall of the Virgin Galactic Gateway to Space hangar in Las Cruces, N.M. Credit: Mark Greenberg / Virgin Galactic

Wells Fargo profit up, but stock falls as revenue slips

Wells Fargo & Co.'s profit jumped 21% as it sorted out bad-loan troubles and cut costs, but Wall Street slammed the San Francisco bank as its third-quarter revenue declined.

Some key measures of profitability also dropped at Wells Fargo amid the weak economy and falling interest rates. The bank's shares plunged $1.88, or 7%, to $24.70 in midday trading, although its stock-market value, at about $130 billion, remained the highest in the industry.

Wells Fargo, the fourth-largest U.S. bank as measured by assets but the largest consumer lender, said Monday it earned $4.06 billion, or 72 cents per share, compared with $3.34 billion, or 60 cents per share, in the third quarter of 2010.

Loans and deposits both rose during the quarter. But revenue fell 6%, from $20.87 billion to  $19.63 billion, as its income from interest, fees and trading declined.

Another megabank, New York's Citigroup Inc., said Monday it earned $3.77 billion, or $1.23 per share, up from $2.17 billion, or 72 cents per share, in last year's third quarter. Citi shares fell 36 cents, or 1.3%, to $28.04 at midday.

Archrival Bank of America Corp., which reports its earnings Tuesday, recently disclosed plans to start charging customers $5 a month for using debit cards, triggering waves of protest from consumers and politicians.

During the Wells Fargo earnings call, analyst Chris Kotowski of Oppenheimer & Co. suggested the $5 fee might become an industry standard. By his calculation, that would largely offset revenue big banks have lost as a result of the Federal Reserve cutting in half the amount they can charge merchants who accept debit cards for payments.

Wells Chief Executive John Stumpf was guarded in commenting on how his bank would proceed on that controversial front, referring to a pilot program, just started in a few states, of a $3 monthly fee for customers who make purchases with debit cards.

But Stumpf said Wells Fargo, while proceeding cautiously on raising fees, needs to be compensated for the cost of providing customers safe and easy access to their deposits, including online and mobile banking as well as debit cards and the biggest national network of more than 6,000 branches.

"Our customers are going to tell us ... how they'll pay for those services," Stumpf said.

Christmas travel spending to increase, survey says

Despite continued high unemployment rates and a volatile stock market, American who plan to travel for the holidays expect to spend up to 43% more this year, according to a new survey.

The online survey released Monday by the American Express credit card company found that the percentage of Americans planning to travel for the holidays will stay about the same as last year.

But the survey also found that those Americans who plan to travel expect to spend about $659 on holiday travel this year, an increase of $200, or 43%, over last year.

Most of the additional spending, according to the survey, will go toward dining out and entertainment.

Although most Americans plan to drive to their holiday destinations, the percentage of travelers who will fly is expected to increase 10% to 36%.

"No matter where consumers choose to go, there is a clear interest in getting more out of travel," said Claire Bennett, senior vice president and general manager of American Express Travel.

Still, Americans continued to look for bargains. When asked what their first consideration was in planning holiday travel, 40% of those surveyed said budget while 25% said destination.

The survey, conducted by Echo Research for American Express, was completed online by 2,017 adults between Sept. 28 and Oct. 2.

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Fall colors: Aspens turning gold in Convict Lake, parts of Eastern Sierra

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Company that puts ads on airport bins to expand

-- Hugo Martin

Photo: Holiday travelers line up at Los Angeles International Airport. Credit: Los Angeles Times

Industrial production shows gains in September

The country's machines continued to whir in September, as industrial production increased 0.2% after remaining unchanged in August, boosted by strong manufacturing figures. Industrial production rose 5.1% in the third quarter.

Manufacturing, once a sector all but left for dead in the U.S. economy, is playing a big role in the country's recovery. Auto companies are making cars again, spurring demand for suppliers and parts manufacturers. Production of motor vehicles and parts rose 0.7% in September.

In the third quarter, the output of business equipment rose 12.6% and the output of transit equipment — including trucks and civilian aircraft — jumped 31.8% in September, according to the report from the Federal Reserve.

As the dollar loses value, more companies are expanding U.S. manufacturing operations at the expense of their overseas ones, said Mitch Free, chief executive of MFG.com, a website that connects businesses and factories. They often produce smaller batches of goods in the U.S. because they don't have to ship them in bulk, he said, which may be leading to the relatively slow growth.

"I think it's still touch-and-go," he said.

Production of food, beverage and tobacco products grew in the third quarter after declining the previous quarter.

"This is a 'not-bad' report," said Patrick Newport, of IHS Global Insight, in a note. "It shows the manufacturing sector moving forward during September, though at an uninspiring rate during a very rocky quarter."

RELATED:

Carmakers' rebound is driving jobs in the U.S.

Housing, industrial production data give mixed signals

— Alana Semuels

Photo: Workers assemble truck components at a Volvo plant in Virginia. Credit: Steve Helber / Associated Press

Pentagon, NASA open space launch missions to private ventures

The U.S. government has taken the first steps toward allowing commercial space companies to launch its national security satellites into outer space.

The Air Force, NASA and the National Reconnaissance Office -- the secretive federal umbrella agency that operates spy satellites -- have signed an agreement to establish clear criteria for private rocket builders to launch their pricey payloads, which include $1-billion spy satellite and robotic missions.

United Launch Alliance, a joint venture of aerospace behemoths Lockheed Martin Corp. and Boeing Co., is currently the Pentagon’s sole launch provider for such missions. The new agreement could break the company’s virtual monopoly on the launches and give opportunities to smaller upstart firms, such as Hawthorne-based Space Exploration Technologies Corp.

The company, better known as SpaceX, has repeatedly contended that it can provide rockets at a fraction of of its competitors' prices. For example, SpaceX said launches on its Falcon Heavy would cost  $80 million to $125 million. This is half the cost of United Launch Alliance’s similar-sized Delta IV Heavy rocket, which can run around $250 million, according to the Federal Aviation Administration’s most recent estimate.

Elon Musk, SpaceX’s chief executive, has publicly criticized the Pentagon for not allowing competition with United Launch Alliance. But now -- at a time when all aspects of federal spending are under scrutiny -- his sales pitch has resonated with the government.

“Fair and open competition for commercial launch providers is an essential element of protecting taxpayer dollars,” he said in a statement commending the government's decision.

But SpaceX has yet to build the Falcon Heavy. It is still in development. That didn’t stop the company from breaking ground in July on a $30-million launchpad at Vandenberg Air Force Base, located northwest of Santa Barbara.

Situated along the Pacific Ocean, Vandenberg has primarily been used for launching spy satellites since the beginning of the Cold War because its location is considered ideal for putting satellites into a north-to-south orbit.

At the time, there were no guarantees that the military or NASA would step forward to pay for the Falcon Heavy to lift its payloads into space someday.

There still isn’t a guarantee that SpaceX will win those contracts, but the government's recent announcement gives the company a chance. To win, SpaceX and other commercial companies' rockets must first meet detailed technical requirements and have several successful launches under their belts.

“This strategy is the best balance of ensuring reliable access to space while encouraging competition and innovation in the launch industry,” Erin Conaton, undersecretary of the Air Force, said in a statement. “We are committed to providing a level playing field to all competitors in the interest of ensuring the best capability for our war fighters and the best value to the American public.”

RELATED:

SpaceX says it's developing the first fully reusable rocket

SpaceX is making $30-million bet on rocket at Vandenberg

Boeing 787 Dreamliner the first of a new generation of aircraft

-- W.J. Hennigan

twitter.com/wjhenn

Photo: United Launch Alliance's Delta IV Heavy rocket rises from a launch pad at Vandenberg Air Force Base in January. The rocket was carrying a spy satellite for the National Reconnaissance Office. Credit: Bryan Walton / Associated Press/Santa Maria Times

California launches $1.8-billion muni bond offering

California on Monday offered tax-free yields as high as 4.87% on long-term general obligation bonds, hoping to attract substantial demand from individual investors.

The state is trying to raise $1.8 billion in the bond sale, its second offering in less than a month. The proceeds will be used to finance a backlog of voter-approved infrastructure projects.

Treasurer Bill Lockyer set preliminary yields on the bonds at levels above what the state paid in the last sale -- reflecting the rebound in market interest rates in recent weeks as U.S. economic data have pointed to slow growth but not recession. Higher yields are good for investors but more costly for taxpayers.

The bonds are being sold in maturities of three to 30 years. The state is offering 2.10% on the five-year bonds, up from 1.61% in the September deal. Ten-year bonds are offered at 3.51%, up from 3.17% at the last sale; the 30-year issue is offered at 4.87%, up from 4.80%.

The interest on the bonds is exempt from state and federal income tax for California residents, so the returns can be worth substantially more than similar fully taxable yields, depending on an investor’s tax bracket.

California still has the lowest credit rating of any state, reflecting the weak economy and the state’s history of budget struggles. The bonds are rated A1 by Moody’s Investors Service and A- by Standard & Poor’s. Those ratings are considered “upper medium grade.”

Individual investors can submit orders for the bonds Monday and Tuesday. Orders must be placed with brokers; the state doesn’t sell its bonds directly to investors.

Institutional investors will bid for the remaining bonds on Wednesday, which is when the final yields will be set. Individual investors who don’t like the final yields have the option of canceling their orders.

The bonds are sold in minimum blocks of $5,000. For more information on the sale, go to Lockyer’s website, buycaliforniabonds.

RELATED:

California plans $2-billion bond sale amid rising yields

California sells out $5.4-billion short-term note sale

California sells $2.4 billion in bonds as yields fall

Investing: Is the bond market at a crossroads?

-- Tom Petruno

Follow me on Twitter: Twitter.com/tpetruno

Blue Shield of California names grant recipients

Blue Shield of California said it is preparing to hand out $20 million in grants to hospitals, medical groups and other healthcare providers who are setting up new partnerships to deliver medical care more efficiently.

The nonprofit insurer named 18 groups of providers across California who will receive grants of as much as $2 million by Dec. 1.

The list of recipients includes St. John's Health Center in Santa Monica, Children's Hospital Los Angeles and Huntington Memorial Hospital in Pasadena.

St. John's is to receive $2 million to implement a program to better integrate the work of its doctors and to decrease unnecessary patient readmissions, among other things.

Children's Hospital is set to receive $1.1 million to improve its case management, enhance its information technology system and take other steps to improve care for its pediatric population.

Huntington is to receive $980,000 for initiatives to decrease readmissions and emergency room use.

The providers are all setting up so-called accountable care organizations that bring together hospitals, doctors and insurers in some cases to improve patient care and cut costs. The federal healthcare overhaul calls for the expansion of these organizations as a way reduce unnecessary healthcare spending.

Twelve of the 18 partnerships are located in Southern California. They include the Greater Los Angeles Care Innovation Corridor, a partnership among USC, the Catholic Healthcare West hospital chain and Methodist Hospital of Southern California. That team is scheduled to receive $300,000 from Blue Shield to develop a "seamless" system of medical care.

Blue Shield said it is making the healthcare grants as part of a promise to return money to policyholders and the community when its net income exceeds 2% of revenue.

The San Francisco-based insurer announced last week that it would credit $283 million off December insurance bills for nearly 2 million customers in the state as part of that promise.

The company announced a similar $167-million give-back in June; that money is being credited to insurance bills this month.

Blue Shield said it is applying an additional $10 million from each of those announcements for the healthcare grants. Officials said they received nearly 60 applications from healthcare providers across the state.

"This demonstrates overwhelming interest among providers in collaborating to reduce costs and enhance the quality of care," Paul Markovich, Blue Shield’s executive vice president and chief operating officer, said in a statement. "We're proud to support all of our grantees as they work to materially improve care and succeed under federal health reform."

ALSO:

New California healthcare laws expand consumer protections

Providence partnership with doctors seeks improved care, savings

Cost of employer health coverage climbs, survey finds

-- Duke Helfand

Photo: A money changer counts U.S. dollar bills. Credit: Tomohiro Ohsumi / Bloomberg

Pain at the pump continues

Retail gasoline prices are on the rise again after five straight weeks of decline. The new increases are adding to the pain of historically high fuel costs for this time of year.

In California, which has returned to its customary position as the most expensive state for fuel in the 48 contiguous states, the average cost of a gallon of regular rose 4.8 cents over the past week to $3.853. The numbers are courtesy of the AAA Fuel Gauge Report, which uses retail receipts from more than 100,000 service stations around the U.S.

A year ago, the average price for a gallon of regular gasoline in California was $3.149, the AAA said. In the past year, that means the cost of filling a typical 15-gallon tank has gone up by $10.56.

Nationally, the price was also on the rise, up 6.7 cents over the past week to an average of $3.462 for a gallon of regular gasoline. A year ago, the national average was just $2.834 a gallon.

One major reason for the increases was the fact that the U.S. is exporting a considerable amount of fuel overseas, leaving the nation's supplies more vulnerable to sudden price bumps if there are any refinery outages.

"Highlighting what I've reiterated for weeks, we're seeing gasoline prices continue their volatile trend, and this time that trend is upward," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, where members report the lowest and highest prices they see.

"Over the next week, we'll see a continued rise in gasoline prices," DeHaan added.

Also: The new normal on gasoline prices

Rising exports keep U.S. fuel prices high

California gasoline use falls despite more drivers

--Ronald D. White 

 Chart: GasBuddy.com's latest nine-month tracking of the national average on regular gasoline prices shows rising pain at the pump. Courtesy: GasBuddy.com

The Top 1%: Executives, Doctors and Bankers

The “99-percenters” protesting at Occupy Wall Street should think about occupying the C-suites across America as well, at least if their primary complaint is about income inequality.

CATHERINE RAMPELL

Dollars to doughnuts.

That is one implication of this fascinating paper on the occupations of the top 1 percent of Americans, which I came across via Mike Konczal. The paper is by Jon Bakija of Williams College, Adam Cole of the Treasury Department and Bradley T. Heim of Indiana University, and is based on tax data from 2005 (so, before the financial crisis).

Dollars to doughnuts.

It finds that about a third of Americans in that top percentile were executives, managers and supervisors who work outside of finance. The next biggest share, at 15.7 percent, went to medical professionals, followed by those in financial services with 13.9 percent.

The share of 1-percenters who work in finance has been rising, as you can see. In 1979, the earliest year analyzed, just 7.7 percent of those at the top percentile worked in finance, about half the share in 2005.

As we’ve written many times over, the total share of income going to the top 1 percent has increased in recent decades. In 2005, the top 1 percent of earners received 16.97 percent of total income distributed to all households across the United States.

The C-suiters accounted for about a third of that chunk received by the top percentile. Put another way, the nonfinance executives, managers and supervisors at the very top of the income distribution received 6.35 percent of all income received by all Americans in 2005.

Consumer Confidential: Cell bill shock. BlackBerry. iPhone sales.

Here's your mama-told-me-not-to-come Monday roundup of consumer news from around the Web:

-- As my colleague Jim Puzzanghera reported in Monday's paper, wireless companies will finally make it easier for customers to avoid sky-high bills. AT&T, Verizon and other major cellphone providers have agreed with U.S. regulators to begin sending alerts to customers who are approaching monthly voice, text or data limits. The aim is to help them avoid hefty additional charges that cause what consumer advocates call bill shock. Under the voluntary industry guidelines, companies also will send alerts when customers exceed their plans' limits and are subject to overage charges. Customers traveling abroad will be warned that they are about to incur often pricey international roaming fees. The companies  agreed to be customer-friendly only after federal officials made clear that new regulations would be imposed if they didn't.

 -- Speaking of cellphones, BlackBerry customers are being offered some free apps to keep them from fleeing the service after nasty outages last week. Research in Motion says the apps, worth more than $100, will be made available over the coming weeks on BlackBerry App World. They include iSpeech Translator, Bejeweled and Texas Hold'em Poker 2. The offer runs until the end of the year. Research in Motion also will offer its enterprise customers a month of free technical support. Last week's blackout interrupted email and Internet services for tens of millions of users globally and left company leaders apologizing profusely.

-- One last wireless news item (giving me the hat trick): Apple says it sold more than 4 million units of the new iPhone model in three days. It's selling more than twice as fast as the previous model did when it launched last year. Apple and its phone company partners started selling the iPhone 4S on Friday in the U.S., Australia, Canada, France, Germany, Japan and Britain. That's two more launch countries than last year. There are also more phone companies selling the phone. In the U.S., Sprint Nextel is the new carrier. When Apple launched the iPhone 4 last year, it sold 1.7 million in the first three days.

-- David Lazarus

Photo: Cellphone "bill shock" could be become less frequent. Credit: Randi Lynn Beach / For The Times

 

Wall Street: Germans halt stock market rally

Gold: Trading now at $1,683 an ounce, unchanged from Friday. Dow Jones industrial average: Trading now at 11518.55, down 1.1% from Friday.

Scaling back expectations. Stocks are falling this morning after Germany tried to scale back expectations for a European rescue plan  that is in the works.

New bank results. Citi and Wells Fargo both reported profits this morning, but the news out of their Wall Street divisions was not good.

Obama and the protesters. There are signs that President Obama may be ready to harness anti-Wall Street anger to help his campaign.

Fighting with customers. A few big banks have gotten in trouble for apparently stopping customers who came to a branch to shut down their account in protest.

Taxi trader. Scott Curtis is one of a number of laid-off financial industry workers who has taken to driving a New York City taxi -- and pitching himself to potential employers at the same time.

-- Nathaniel Popper

twitter.com/nathanielpopper

Photo: Stan Honda / Getty Images

A leveraged EFSF is pure poison

French banks are vulnerable (Photo: Reuters)

Big snag. If Europe’s leaders do indeed leverage their €440bn bail-out fund (EFSF) to €2 trillion or €3 trillion through some form of "first loss" insurance on Club Med bonds – as markets now seem to assume – the consequences will be swift and brutal.

Professor Ansgar Belke, from Berlin's DIW Institute, said any leveraging of the EFSF would be "poisonous" for France’s AAA rating and would set off an uncontrollable chain of events.

"It counteracts all efforts made so far to stabilize the eurozone debt crisis, which are premised on the AAA rating of a sufficiently large number of strong economies. In extremis, it would probably cause the break-up of the eurozone", he told Handlesblatt.

France is already vulnerable. It has the worst budget deficit and primary deficit of the AAA states in Euroland. (Yes, Britain is worse, but the UK has a sovereign currency and central bank. Chalk and cheese.)

Dr Belke said France is already under pressure. BNP Paribas, Société Générale, Crédit Agricole may need €20bn in fresh capital, with knock-on risk for the French state. He warned that France’s public debt (Now 82pc of GDP) would shoot up to 90pc of GDP if the debt crisis rumbles on. Variants of this theme were picked up by other German economists in a Handelsblatt forum.

Thorsten Polleit from Barclays Capital said France’s banking woes could put "massive pressure" on French finances, but the risks do not stop there. Germany itself is at risk. "The bail-out burdens taken on by the German government could lead to a drastic deterioration of our own debt, and put Germany’s AAA in doubt."

Mr Polleit told me Germany’s debt was 83.2pc of GDP at the end of last year (higher than France, but the current deficit is much lower). "Of course there is a danger. We are in a tough situation and there is no easy way out."

We will find out soon enough what EU leaders actually intend to do – rather than what the European Commission would like them to do. As US Treasury Tim Geithner said "the devil is in the details", not in the headlines.

Chancellor Angela Merkel sought to play down the Grand Plan earlier today. "Dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled," said her spokesman. There is no "big bang" miracle cure.

So far there is an ominous silence from the rating agencies. One has to wonder what they think of apparent plans to use the EFSF for "first loss" guarantees of EMU debt — debt to be upheld by states that may or may not be solvent, depending on the trajectory of the world economy and the trigger-happy reflexes of uber-hawks at the European Central Bank.

At the moment the EFSF is a privilleged creditor (or so we assume: this is not contractual).

Banks, life insurers, pension funds, and others who bought Greek debt in good faith will (and Portuguese debt?) take the loss. Only once they are reduced to zero with a 100pc haircut does EFSF debt start to be written down – ie, this is "last loss".

The new "first loss" idea inverts the order. The EFSF would take the first hit. That changes everything. Surely the EFSF deserves no more that BBB rating, or perhaps just CCC, if EU leaders really embark on this course.

The whole discussion has become surreal.

Wal-Mart executives resign in China labeling scandal

Wal-Mart said Monday it was replacing the head of its operations in China, the giant U.S. retailer's latest setback in the country after employees were arrested and detained last week in the western city of Chongqing in connection with a labeling scandal.

The company said in a statement posted on its website that Ed Chan, its chief executive in China since 2007, was leaving the company for personal reasons. Clara Wong, a senior executive for human resources, was also stepping down, the statement said.

Though Wal-Mart did not link the personnel moves to the controversy in Chongqing, the company continues to deal with fallout from charges that it sold about 140,000 pounds of pork over the last two years that was mislabeled as a more expensive organic variety. The added cost to consumers amounted to about $115,000, according to the city government's website.

Wal-Mart executives resign in latest set-back for U.S. retailer in China

Wal-Mart said Monday it was replacing the head of its operations in China, the latest set-back in the country for the giant U.S. retailer after employees were arrested and detained last week in the western city of Chongqing over a labeling scandal.

The company said in a statement posted on its website that Ed Chan, its CEO in China since 2007, was leaving the company for personal reasons. Clara Wong, a senior executive for human resources was also stepping down, the statement said.

Though Wal-Mart did not link the personnel moves to the controversy in Chongqing, the company continues to deal with fallout over charges it sold about 140,000 pounds of pork the past two years that was mislabeled a more expensive organic variety. The added cost to consumers amounted to about $115,000, according to the city government’s website.

Storming the Capitalist Castle

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

Wall Street is not literally a castle, and the small green space of Zuccotti Park claimed by Occupy Wall Street may soon be emptied. But an upstart movement has spray-painted a new slogan onto the ramparts of the economic establishment.

Today’s Economist

Perspectives from expert contributors.

“We Are the 99 Percent” effectively publicizes a message consistent with research on the distribution of income and wealth: the top 1 percent of households in the United States represents an economic aristocracy.

Perspectives from expert contributors.

Over the last 30 years, it has consolidated and amplified its privileged position, making strategic political investments in policies ranging from financial deregulation to cuts in top marginal tax rates.

It took home 21 percent of the nation’s pretax income in 2008, up from 9 percent in 1976. It controlled 36 percent of the nation’s private wealth in 2009.

Some economists argue that inequality has no downside — a view critically dissected by Timothy Noah in a terrific essay, “The United States of Inequality.”

As a poster I admired at the park last Wednesday succinctly put it: “We want democracy, not plutocracy.”

The protesters don’t necessarily demonize the top 1 percent or suggest that taxing them at a higher rate will balance the budget. What brings them together is the conviction that this group exercises disproportionate control over our economic and political life.

Republicans seem to confirm this view when they assert that higher taxes on millionaires would stunt employment growth – as though a small reduction in disposable income would demoralize otherwise mighty job creators.

The very rich are depicted as champions of the people who would graciously repay further tax cuts with economic growth. Yet Republican tax cuts dug much of the budget hole we live in.

A quarter of the millionaires in the United States pay lower tax rates than some middle-class households, vindicating concerns expressed by Warren E. Buffett, the investor king of Omaha now widely considered a traitor to his class.

The posters I saw didn’t propose class war, but they did express class rage. “I paid for your bailout” said one, “and I want a refund.” “Health care, not wealth care,” said another. Several said simply, “I need a job.”

The protestors I heard didn’t pretend to offer a political program. One held up a sign saying, “We’re Here, We’re Unclear, Get Used to It.” He genially described his participation in a week’s worth of workshops and discussions as a “think tank of democracy.”

Another, more discursive poster described the ideals of the “solidarity economy,” starting with: “I don’t have a boss. I’m a worker-owner in a cooperative business,” and ending with, “I joined a credit union so my money stays in the community.”

What seems to be emerging is what the historian Gar Alperowitz described as a process of “evolutionary reconstruction.” It might start by making capitalism more distinct from feudalism.

This idea came to me while reading about a great new product that just hit the market: a $6,400 toilet with its own remote control for water spray and drying fan. Marie Antoinette would have loved it for Versailles.

Whether the ramparts are breached or not, I predict a long and fascinating siege.

Solar energy jobs growing in U.S. and California, study says

One in every four solar energy jobs in the United States is held by a Californian, and growth in the clean-tech industry is burgeoning nationwide, a new study said.

In August, California had an estimated 25,575 of the 100,237 solar-related jobs nationwide, according to the National Solar Jobs Census 2011, scheduled for release Monday by the Solar Foundation, a research and education organization in Washington.

The total for California was four times greater than the runner-up, Colorado, with 6,186 solar jobs as of last summer.

California ranked first in the nation for generating electricity from both photovoltaic solar panels and concentrated solar power systems that use mirrors to focus the sun's energy to create steam to run turbines, the study said.

"This report shows that the solar industry is not only creating green jobs across California but that the industry is forecast to continue growing at a much faster pace than the overall U.S. economy," said MIchelle Kinman, a clean-energy advocate for Environment California. "California industry and policymakers have a tremendous opportunity to build on this solid foundation and make solar a centerpiece of the state's energy policy."

Nationally, employment in all parts of the solar industry -- including manufacturing, installation, residential, commercial and large-scale power generation -- grew 6.8% in the 12 months prior to August, the study said. Overall U.S. job growth was less than 1% for the same period, it said.

Growth is expected to accelerate by 24%, creating 24,000 jobs over the next year, based on a survey of solar employers.

The industry's momentum is expected to continue despite bad publicity it received from a political scandal surrounding the bankruptcy of Northern California solar panel manufacturer Solyndra. The Fremont-based company recently closed after getting a $535-million federal loan guarantee.

"We have to look beyond the failure of one company and see the tremendous success that's occurring here," said Arno Harris, the chief executive of Recurrent Energy, a San Francisco solar developer.

Solar, added David Hochschild, vice president of another Fremont solar panel maker, Solaria Corp, "is on the cusp of playing a large role in mainstream markets."

Here's the census' list of the top 10 states by the number of solar industry jobs:

1. California          25,575

2. Colorado             6,186

3. Arizona               4,786

4. Pennsylvania       4,703

5. New York            4,279

6. Florida                4,224

7. Texas                 3,346

8. Oregon                3,346

9. New Jersey           2,871

10. Massachusetts    2,395

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-- Marc Lifsher

Photo: Solar panels on the roof of a Fontana warehouse in 2008. Credit: Gina Ferazzi / Los Angeles Times