Leasing News

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Equipment Leasing Association Calls CIT IPO 'A Good Sign'; Successful IPO Confirms Market Confidence in Commercial Finance Industry

ARLINGTON, Va.----In response to the initial public offering of CIT by Goldman Sachs, Equipment Leasing Association (ELA) President Michael Fleming, stated, "The successful CIT IPO confirms the attractiveness of the commercial finance industry and confidence in proven companies like CIT. CIT is among the most respected finance names in America, with a long history of profitability and success in the equipment leasing industry. The success of CIT's IPO shows that the market respects good companies and is willing to invest in an industry that consistently performs well."

In an industry short of good news in recent years - with consolidation, the virtual disappearance of public finance companies, and capital flowing to more "glamorous" industries, Fleming continued, "this is a good sign that CIT and other companies that have grown and perform consistently can raise capital in this market. It is a tribute to the stability and strength of CIT and the leasing industry."

DVI, Inc. (NYSE:DVI) and GATX Corporation (NYSE:GMT) are examples of two other companies that have successfully raised capital in recent months. In March 2002, DVI completed the sale of $25 million of its subordinated convertible notes to a single international investor. In January 2002, GATX completed a private offering of $175 million of senior unsecured convertible notes issued under Rule 144A.

The offering was increased from $150 million to $175 million as a result of the underwriters exercising the over-allotment option due to strong investor demand.

The most recent ELA Annual Survey of Industry Activity reinforces that the performance of the leasing and finance industry is solid and stable. The return on total assets was 1.2 percent and the return on equity was 12.4 percent. Credit quality is strong in the industry, with 96.3 percent of lease receivables being current, and charge-offs of less than 2 percent.

Organized in 1961, the Equipment Leasing Association (ELA) is a non-profit association representing companies involved in the dynamic equipment leasing and finance industry. ELA's mission is to promote the leasing industry as a major source of funds for capital investment in the United States and abroad. ELA maintains an informational portal for financial decision-makers at www.leaseassistant.org.

Headquartered in Arlington, Va., ELA has more than 850 member companies, including CIT, DVI, and GATX. Equipment leasing is estimated to be a $244 billion industry in 2002.

The CIT Group gained its independence yesterday, but the process was painful due

Shares of CIT were sold at $23 each to the public, but the price fell to $22 in New York Stock Exchange trading. Volume was 72.5 million of the 200 million shares sold.

Tyco International, the troubled conglomerate that bought CIT, a finance company, just a year ago for $9.5 billion in cash and stock, was the seller, and it was in no position to drive a hard bargain. It received just $4.42 billion, with underwriters set to collect the additional $184 million paid by investors as their fees.

however. The closing price of $22 is 8 cents below the price the underwriters, led by Goldman, Sachs and Lehman Brothers, paid for the company. It would surprise no one if the underwriters accumulated some stock during the day to support the price. Nearly every major Wall Street firm was part of the underwriting syndicate for the offering. But Morgan Stanley was the exception, and it dampened spirits with a report by Kenneth A. Posner that raised concerns about CIT's credit quality and gave the stock an "underweight" recommendation.

After the close of trading, Albert R. Gamper Jr., CIT's chief executive, said he was happy. He allowed that the after-market trading had been "a little soft" but added, "It was a lousy market to do an I.P.O. in."

For CIT, getting the price up quickly is more important than it would be for most companies. That is because the underwriters have an option to raise the size of the offering by 20 million shares. If they choose to exercise it, the extra $441.6 million that would bring in would go to CIT, giving it more capital to work with. In all probability, those shares have already been sold, but whether the option is exercised will depend on how many shares the underwriters repurchase and how the stock performs during the next week.

Standard & Poor's and Fitch raised CIT's credit ratings yesterday, back to the levels they held before they were downgraded amid Tyco's problems. Moody's had not downgraded the ratings, and CIT should now be able to return to the commercial paper market.

Shares of Tyco fell $1.10, to $12.65, partly because of disappointment that the offering price was $23, not the $25 to $29 that had been sought. In a conference call, John F. Fort III, Tyco's interim chief executive, sought to reassure worried investors that its accounting is sound. "We don't have any information that would call into question the company's accounting practices," he said, adding, "Something like WorldCom just couldn't happen here."

Financially, buying CIT was not the disaster for Tyco that one might think. That is because it paid most of the purchase price with stock, then valued at $50.70 a share. (The Dai-Ichi Kangyo Bank, a Japanese institution that was CIT's largest owner and is part of Mizuho Holdings, insisted on being paid $2.5 billion in cash for its stake.)

If one values the Tyco stock issued at the current market price, however, the total price Tyco paid for CIT was $4.2 billion, a bit less than it received from selling it.

(And more reason to congratulate Gamper and his staff. They certainly earned their

Are you currently a member of the Association For Governmental Leasing & Finance (AGL&F)?

Are you currently a member of the National Association of Equipment Leasing Brokers (NAELB)?

Are you currently a member of the United Association of Equipment Leasing (UAEL)?

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NEW YORK, -Standard & Poor's said Tuesday that it raised the ratings on CIT Group Inc. and its subsidiaries, including raising CIT's counterparty credit ratings to single-'A'/'A-1' from triple-'B'-plus/'A-2'. The ratings were removed from CreditWatch with developing implications where they were placed on Feb. 4, 2002. The outlook is now stable. Approximately $33 billion of debt is affected.

The upgrade reflects CIT's successful delinkage from Tyco International Ltd. (NYSE:TYC - News) following the pricing of its IPO on July 1, 2002, at $23 per share, yielding proceeds of $4.6 billion. The IPO is expected to settle and close on July 8, 2002. Concerns related to the company's ties to the parent, which resulted in CIT losing access to the CP markets and raising its long-term borrowing costs, have been removed. Nevertheless, the company still will be challenged to regain its momentum, in terms of reactivating its strong franchise value within its markets, rebalancing its liquidity sources, and regaining access to the unsecured long- term debt and CP markets. CIT plans to pay down its bank lines and tap the CP markets, albeit at a much reduced $3 billion-$5 billion program. It is expected that CIT will tap the unsecured debt markets and that securitizations will represent 25% of total funding.

"Standard & Poor's remains concerned about the company's $3.6 billion aircraft portfolio, significant exposure to the retail and telecommunications sectors, and exposure to Argentina," said credit analyst Lisa J. Archinow, CFA. Any material asset quality deterioration could result in ratings pressure.

While capital levels have improved since Tyco acquired CIT, capital and reserve levels remain a concern. Retention of the proceeds from the exercising of a 10% overallottment option by the underwriters (green shoe) within the next 30 days would provide some mitigation of risk, in addition to the company's lower 10% dividend payout rate going forward. Standard & Poor's would view an increase in CIT's capital or reserve levels as a prudent move

NEW YORK-- 2002--Fitch Ratings has raised CIT Group, Inc.'s (CIT) and related entities' senior debt, subordinated debt, preferred stock, and commercial paper ratings to 'A', 'A-', A-', and 'F1' from 'BBB', 'BBB-', BBB-', and 'F2', respectively. These actions from the completion of CIT's initial public equity offering and effective separation from Tyco International Ltd., the company's former parent. All ratings have been removed from Rating Watch Evolving. The Rating Outlook is Stable. Approximately, $26 billion of debt are covered by Fitch's actions.

CIT's ratings reflect Fitch's increased comfort with liquidity management, including the anticipated reduction in the company's commercial paper program to $3-$5 billion from over $8 billion. Comfort with the liquidity plan stems from the contingent sources of liquidity the company accessed during this period - $3 billion in funding through ABS (equipment and home equity) and new programs it executed - $2 billion in new conduit facilities (both of which have been tested and repaid) as well as CIT's ability to re-enter the term unsecured debt market despite looming concerns for the company under the Tyco umbrella.

While CIT has worked diligently to develop contingent sources of liquidity and takes great comfort in surviving the capital markets stress it has been under thus far, Fitch believes that this will be an enduring process for market funded companies which seek to earn and maintain 'F1' ratings. Issuers such as CIT must regularly demonstrate their ability to monetize assets to ensure that in the event they are unable to access unsecured sources of capital, the company would be in a position to unwind the portfolio or execute contingency funding plans that are sufficient to meet all upcoming maturities. Securitization, one means of demonstrating market accessibility, has accounted for at least 20% of funding for CIT and that will continue to be the case at a minimum.

CIT plans to resume a more normal funding strategy which includes accessing the unsecured capital markets in short order, in meaningful amounts, including the repayment of its bank funding by the end of 2002. It is important to note that $3.8 billion of bank borrowings are not actually due until March 2005.

From a capitalization perspective Fitch views CIT as modestly undercapitalized, however, CIT is stronger than is it was pre-Tyco due to some divestitures and improved capital formation, aided by slowed origination activity resulting from market conditions. Based on the offering price of the IPO, CIT will need to take at least a $1 billion non-cash charge to writedown goodwill in accordance with SFAS 142. Since Fitch views CIT's capitalization and leverage on a tangible basis, this action is a non-event. Current asset quality trends and loan loss reserve levels are concerns with net chargeoffs outpacing peak 1991 and 1992 levels. However, CIT's acquisition of Newcourt and consumer expansion make such historical comparisons less useful. While a concern that bears monitoring, portfolio performance remains manageable.

Based in Livingston, NJ, CIT Group, Inc. is one of the largest commercial finance companies in the world with managed finance receivables and operating leases of $48 billion March 31, 2002. The company has leading market positions in a variety of business segments.

Fitch has raised the following ratings, removed them from Rating Watch Evolving, and assigned a Rating Outlook of Stable:

Tyco technology occuppying over a dozen buildings surround ours in the Mineta International Airport Industrial Park will soon be empty, as our neighbors report this division is closing. Around the other parts of the San Francisco Bay Area, other Tyco

Questions surrounding Tyco International's accounting practices and financial stability have derailed a proposed merger with McGrath RentCorp., a Livermore equipment rental firm.

McGrath has exercised its right to terminate the agreement by its June 30 deadline, ending a deal first announced in December. Tyco had agreed to buy McGrath for $482 million in cash and stock.

"Because of Tyco's operating and management issues, we no longer believe an acquisition by Tyco is in the best interest of our shareholders," said Robert McGrath, chief executive officer of McGrath RentCorp., in a statement released Monday. The company, founded in 1979, rents portable classrooms and telecommunications equipment.

The deal with Tyco, a sprawling manufacturing and service conglomerate based in Bermuda, began looking shaky after Tyco's woes mounted.

Tyco's shares have lost about 70 percent of their value since the proposed deal was announced, and the company is $27 billion in debt. Tyco's CEO, Dennis Kozlowski, resigned last month and has been charged with sales tax evasion in connection with high-priced art purchases.

"All those things obviously were part of the decision-making," said McGrath's president, Dennis Kakures.

Scott Keller, an analyst with DealAnalytics.com in New York, was not surprised the merger fell through: "There was not a prayer of this deal being saved."

The agreement with Tyco allowed either company to walk away from the deal after the June 30 deadline without incurring any breakup penalties, he said.

Kakures said he is confident about McGrath's future as an independent company. He said he will entertain future bona fide merger offers, but isn't actively seeking them.

"I'm very excited about the prospect for McGrath continuing to be a very viable and strong organization, and we're going to do everything in our power to make that happen," Kakures said.

But the analyst, Keller, said McGrath faces tough times because of its concentration in the telecommunications and education sectors, and the slow economy. Noting the company would be hard-pressed to find a potential buyer like Tyco, he said, "Tyco presented them with a terrific opportunity, had Tyco not fallen to pieces."

Financial Federal Corporation Announces $200 Million Institutional Unsecured Term Financing

NEW YORK----Financial Federal Corporation ("FIF" - NYSE) announced today that its major operating subsidiary, Financial Federal Credit Inc., closed a $200 million private placement with ten institutional investors.

The Company received proceeds of $100 million today and chose to delay funding on the remaining $100 million until August 30, 2002. The proceeds have been and will be used to repay existing debt and for general corporate purposes.

The placement includes fixed rate and floating rate unsecured senior notes with maturities of three, four and five years. The principal amounts of the notes are due at maturity. The fixed rate notes total $112.5 million with a weighted average interest rate of 6.0% and the floating rate notes total $87.5 million with a weighted average interest rate currently at 3.2%.

Steven F. Groth, Chief Financial Officer, commented: "This is the largest debt placement in the Company's history. We are very pleased with the favorable pricing, strong demand and flexible structure of the transaction. Pricing averaged 1.83% over comparable Treasury notes, demonstrating the credit markets' confidence in the Company. The Company received bids well in excess of the initial offering size. In addition, four new investors joined our credit group. We believe the market has rewarded us for our simple business model and our consistent, strong operating results. This transaction adds flexibility to our capital structure and provides the Company with additional liquidity."

Financial Federal Corporation specializes in financing industrial and commercial equipment through installment sales and leasing programs for manufacturers, dealers and end users nationwide. For additional information, please visit the Company's website at www.financialfederal.com.

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Readers are referred to the most recent reports on Forms 10-K and 10-Q filed by the Company with the Securities and Exchange Commission that identify such risks and uncertainties.

PHOENIX, ARIZONA -- Manufacturers' Leasing Services Corp. ("MLSC") has announced the purchase of substantially all of the equipment lease portfolio of Bancorp Group, Inc., with an original equipment cost of over $20 million. Bancorp Group was a subsidiary of New Century Bank, Shelby Township, Michigan, until the bank was taken over by the FDIC in March 2002. Manufacturers' Leasing Services purchased from the FDIC. Roughly 60% of the accounts in the portfolio are presently on month-to-month renewal status, while the remainder of the portfolio consists of leases with up to 48 months of committed remaining term.

"The purchase was completed under MLSC's "End of Term" program, which provides a substantial premium for leases which have reached month-to-month status, thereby enabling the seller to maximize the return on the short term segment of its portfolio; a segment typically excluded or undervalued by most purchasers," explained MLSC President Roger Marce.

MLSC is a privately held equipment leasing company with offices in Phoenix and Denver, engaged in the acquisition of seasoned equipment lease portfolios. MLSC also provides short-term rental and operating lease vendor programs to a diverse range of equipment manufacturers.

Although we had begun discussions with Bancorp Group before the FDIC stepped in, your coverage of the FDIC takeover of Bancorp Group and New Century Bank helped us keep up with events as we put our bid together. Keep up the good work.

I read with interest Paul Nibarger's comment in the 7/1/02 Leasing News. Certainly while UAEL faces challenges, the same with all professional associations, (as well as our Industry) we are in the midst of a good year for UAEL under Joe Woodley and the 2002 Board of Directors and Officers.

Our Spring Education Conference was a success both financially and from a membership benefit standpoint. Members in attendance indicated that the event was well thought out and the presentations timely and beneficial. Some of the membership had not attended recent events until this SEC and were quite pleased with the conference and focus of UAEL.

Our Regions are active, have put on or in the process of scheduling events for our members.

UAEL's Board of Directors is actively in the process of re-working our plans for the next 3 to 5 years, if that is really possible in the present economy. We are dedicated to our members and dedicated to bring them the education, networking and the success resulting from the same.

Staff is putting the finishing touches, along with John Kruse - Conference Chair and his Committee, on the Annual Exposition and Conference in San Diego. Once again UAEL is presenting the forum for our members to acquire additional skills to improve their personal and company performance.

Membership under Bill Grohe and our Membership Committee chaired by Bob Teichman, CLP and Ginny Young is diligently working toward our goal of 400 ACTIVE members by year-end. Currently our membership is at 341 up from June numbers of 333 and an 11.4%increase over last year at this time!.

Paul suggests we man the lifeboats, I suggest and encourage Paul to come back on board and get active with us! We are only as good as our Membership and their commitment.

What is past is past and UAEL continues to have a bright and strong future. We are looking to that future, trying to determine its long-term focus. I invite Paul to contribute to UAEL's future!

According to Joan Dalton, former executive director, Bill Grohe, membership director,

(Let me also state that there is a conflict of interest on my part as editor, as in my role

is super sharp. The board also has a lot of talented people, including Bob Fisher who I have known since his days at CIT ( or was it Westinghouse?) I personally think the San Diego Conference should be a big success, and allay all fears about the future. )

The National Association of Equipment Leasing Brokers increased their membership

Here is a breakdown of the membership, again showing they are definitely the largest lease broker association, and only second to the Equipment Leasing Association in membership.

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AUSTIN, Texas (AP) Dell Computer Corp., which made a fortune selling its PCs directly to customers, is taking the experience to the nation's malls.

After a successful trial last Christmas, Round Rock, Texas-based Dell opened a kiosk last week in Austin and plans to open 20 around the country in the next two months.

''The reason we're doing this is to give customers a chance to see, touch and feel our products,'' said Chris Bates, senior manager of Dell's Direct Store program.

Mall customers also can speak with sales representatives about computers, digital cameras, sound systems, printers and other equipment at the ''Dell Direct Store.''

Customized orders must be placed online or over the telephone. The order is built at a Dell factory and delivered to the customer's home.

Dell said the concept will help its burgeoning consumer business while staying true to its direct sales model.

With help from a successful television advertising campaign and a partnership with home-shopping channel QVC, revenue from consumer sales at the company best known for selling to businesses, schools and government has grown 26 percent in the past quarter.

Kevin Hunt, a Dell analyst for Thomas Weisel Partners, said the kiosks are a good way for Dell to reach customers without taking the costlier risk of having an inventory of products and selling them at stores.

WorldCom CEO Blames Ex-Execs for Woes

By MARCY GORDON, AP Business Writer

WASHINGTON (AP) - The chief executive officer of beleaguered WorldCom Inc. on Tuesday laid the blame for multibillion dollar accounting irregularities at the feet of the firm's former executives and cast doubt as well on Arthur Andersen's auditors.

John Sidgmore said he did not know whether WorldCom's founder, Bernard J. Ebbers, had any prior knowledge of the $4 billion hole in the company's books.

"We don't know whether he was involved and we don't know whether he wasn't involved, and that's the truth," Sidgmore said at a news conference at the National Press Club where he was peppered with questions about the firm's current woes and future plans.

Sidgmore expressed optimism at every turn, yet also apologized for "past transgressions" at the firm, and pledged cooperation as the government begins to investigate.

"We want the bad guys exposed. We want the bad guys punished. And we want to move on with our lives at WorldCom," he said.

Sidgmore said that despite the huge telecommunications firm's deteriorating situation, he hoped to avoid bankruptcy. He said WorldCom has about $2 billion in available cash.

He also said that despite wide publicity given the company's difficulties, it had not yet suffered the loss of a major customer.

WorldCom disclosed last month it had improperly accounted for nearly $4 billion in expenses, thus inflating its earnings. The disclosure sent the company's stock plummeting, prompted the SEC to file fraud charges and triggered an avalanche of anger from politicians — President Bush ( news - web sites) included.

The company already has laid off 17,000 of its 80,000 workers, and Sidgmore said additional layoffs were possible.

WorldCom, which owns MCI, is second only to AT&T in the long- distance market.

Sidgmore spoke as technology analysts said that despite WorldCom's considerable Internet holdings, the global network should not suffer any catastrophic difficulties if the firm ceases to exist. They said there could be significant slowdowns in Internet traffic, however.

Arthur Andersen was the firm's auditing firm at the time the irregularities occurred, and Sidgmore referred to the company several times.

"They swear up and down that they didn't know anything about this," he said. "We internally are a little bit concerned that they didn't know anything about it, because if it was going to be obvious to anyone it should've been obvious to them.

"It just tells you how difficult it may have been to find these transactions," he said.

Arthur Andersen, once one of the nation's largest accounting firms, has been reduced to a shadow of its former corporate self as the result of its role in last winter's Enron debacle. The firm was recently convicted of one count of obstruction of justice for destroying Enron-related documents.

Sidgmore began his news conference by taking note of an "understandable outpouring of outrage and anger," but he firmly insisted that the management team he heads had worked from the outset to make the facts public.

"It was this company that audited our auditors. It was this company that turned ourselves in. ... It is this management team that will take this company forward and restore public confidence," he said.

That remained to be seen.

The company's stock is to be delisted on NASDAQ on Friday. And Harvey Pitt, the chairman of the Securities and Exchange Commission ( news - web sites), has derided as "wholly inadequate and incomplete" a sworn statement in which the company explained how it had masked the $4 billion.

Whatever the impact on the firm itself, WorldCom's problems have robbed thousands if not millions of investors of retirement funds, and changed the political landscape in Congress.

Bush has repeatedly expressed outrage at the firm's behavior in recent days. And Senate Majority Leader Tom Daschle has announced that legislation to crack down on corporate irresponsibility will be the first order of business when lawmakers return to the Capitol next week.

"We completely agree with the president on this and I am committed to operating WorldCom with the highest possible standards of ethics and integrity," Sidgmore said.

Despite Pitts' criticism, WorldCom defended its report as an accurate accounting of what happened.

"We were very surprised by (Pitt's) comments," company spokesman Brad Burns said Tuesday. "Based on the SEC order and conversations with SEC staff, we believe they were clear on what we would be able to provide at this time. Our response was entirely in line and is in fact a summary of what we know at this point."

Defense Secretary Donald H. Rumsfeld, said he doesn't believe WorldCom's shaky financial situation poses a risk for the Pentagon ( news - web sites), which uses some of the company's communications systems.

The General Services Administration, which oversees federal contracts, said Monday that it was reviewing all of WorldCom's government contracts.

In the latest development as WorldCom's travails grew, the state comptroller in New York asked a federal court Tuesday to allow him to lead a shareholder lawsuit against the company, some of its executives and Arthur Andersen.

The state's pension fund has lost some $300 million on its investment in WorldCom stock.

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On the Net:

SEC: http://www.sec.gov

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Martha Stewart Broker Handled Shares for Her Friends

By CONSTANCE L. HAYS and PATRICK McGEEHAN NY Times

Martha Stewart turned to her stockbroker at Merrill Lynch, Peter E. Bacanovic, to handle more than $10 million worth of shares offered to friends and associates when her company went public in 1999, Wall Street officials said yesterday, highlighting their longstanding close personal and business relationship.

Late yesterday, Ms. Stewart abruptly canceled

her regular appearance for today on the CBS "Early Show" after the network said it would require her to answer more questions on the air about the government investigations into her sale last December of shares of ImClone Systems. Until now she had never missed the show, which started in 1997, for any reason other than illness.

Ms. Stewart's decision to cancel her appearance demonstrated the pressure she faces as three investigations unfold while she continues to deal with the demands of running a $296 million media empire.

Ms. Stewart, the chairman and chief executive of Martha Stewart Living Omnimedia, has said that she and Mr. Bacanovic made an agreement weeks before the sale to sell the shares in Imclone if the price slipped below $60 a share.

Mr. Bacanovic, who joined Merrill in 1993, also handled trading in the shares of Ms. Stewart's company that she made available to her friends at the offering price of $18 a share. That trading would have enabled him to collect commissions both when they were bought and sold. Trading was exceptionally heavy in the early days, with volume reaching 15 million shares when just 8 million had been issued. Mr. Bacanovic was in charge of stock options issued to executives and other employees, too, several former employees said. "He was the point person on the options," one said.

Morgan Stanley, not Merrill Lynch, was the lead underwriter on the Martha Stewart public offering. While the lead underwriter normally is in charge of the so-called friends- and-family shares, one expert in securities law said it was not unusual for a broker to be designated to handle them for employees and other associates at a small company like Ms. Stewart's.

"She may have been trying to do something helpful for him," said the lawyer, Jonathan Feld, a partner at Katten Muchin Zavis Rosenman in Chicago.

The stock rose as high as $49.50 in its first day of trading. It closed that day at $35.56 and rose above $39 a share in each of the next two days. Not all those who received the initial shares sold them immediately.

Merrill would have kept as much as 70 percent of the commissions Mr. Bacanovic generated in those trades.

Merrill suspended Mr. Bacanovic with pay last month along with his assistant, Douglas Faneuil, after an internal investigation turned up what Merrill called "factual issues involving a client transaction." A person close to that investigation has said that the transaction was Ms. Stewart's ImClone sale, and Congressional investigators have said they have not found proof of any formal agreement for the sale in the hundreds of documents turned over to them by Merrill.

A printout turned over to investigators dated Dec. 20, 2001, lists Ms. Stewart's holdings with Merrill and has "$60" handwritten alongside it. But at least one lawmaker said the document did not provide any solid evidence of an agreement to sell the shares.

"We have no way of knowing when that was written on there," said the lawmaker, Representative James C. Greenwood, a Republican from Pennsylvania who is chairman of the House subcommittee looking into the ImClone sales, "whether it was on Dec. 20 or whether it was written there much later."

Mr. Bacanovic's lawyer, Richard Strassberg, would not comment.

Ms. Stewart's disposal of nearly 4,000 shares of ImClone a day before the news about the Food and Drug Administration's rejection of the company's promising cancer drug was announced has come under scrutiny from the Securities and Exchange Commission, the Justice Department and the Congressional committee.

Ms. Stewart last appeared on "The Early Show" a week ago yesterday, though her usual slot is Wednesday. As a condition of permitting her to go on the air then, CBS news executives said she would have to be interviewed by one of the show's co-hosts about the investigation.

Ms. Stewart complied, but it was clear from her demeanor that she resented the questions put to her by the co-host, Jane Clayson. "I just want to focus on my salad," she said, chopping a cabbage into pieces with a large knife as the interview concluded.

The appearance scheduled for this morning, in which Ms. Stewart was to have demonstrated how to prepare icebox desserts, seemed set to go forward in the middle of the afternoon yesterday. But at about 4:30 p.m., a spokesman for Ms. Stewart informed CBS that she would not appear after all.

"She wasn't going to come on without us asking a question," one network executive said. After discussions that people at CBS called amicable, Ms. Stewart apparently concluded that she could not do that.

"As she explained in her previous interview on CBS last week," a spokeswoman for Ms. Stewart said in a statement, "she is unable to comment or offer any other information at this time out of respect for the investigatory process.

"This inherent conflict," the spokeswoman said, "unfortunately prevents Martha from appearing tomorrow."

In a separate statement last night, Sharon L. Patrick, the president of Martha Stewart Living Omnimedia, acknowledged that "the firestorm of media around this matter has placed unexpected and unusual business demands on our company."

She added: "While it is too early to determine what, if any, long-term impact will result from this matter," the company intends to protect its brands and relationships with customers and business partners.

Ms. Stewart's company has lost 34 percent of its value in the stock market since she became embroiled in the investigations early last month. Yesterday its shares closed at $12.60, up $1.10.

Among the friends and associates who bought shares when her company began trading publicly in 1999 was Charles Simonyi, a Microsoft executive, who said yesterday that he and Ms. Stewart were "very good friends." He said he bought more than 10,000 shares in the offering and obtained more later.

Mr. Simonyi said he had asked Ms. Stewart how she was dealing with the controversy, but said he would not betray her confidence by describing her reply.

Pacific dock workers still in talks

ASSOCIATED PRESS

SAN FRANCISCO – With billions of dollars in trade at stake, shipping companies and West Coast dock workers negotiated through an afternoon contract expiration deadline yesterday and both sides reiterated promises not to force an immediate labor disruption.

Federal officials and businesses across the country fear the economic impact of a strike or lockout, either of which would cut off the flow of goods that enter the nation's 29 major Pacific ports and move to store shelves across the nation.

The union representing 10,500 longshoremen who work the docks has not voted to authorize a strike. The shippers' association, meanwhile, has promised not to lock out the dock workers – unless they stage a work slowdown.

"We have an enormous responsibility to negotiate an agreement without any work interruption on the waterfront," said Joseph Miniace, president and chief executive officer of the Pacific Maritime Association.

The contract expired at 5 p.m. yesterday – 10 minutes before that deadline, the two sides reconvened at their San Francisco bargaining table for the first time since Saturday.

During the last round of negotiations in 1999, the deadline came and went, longshoremen kept working and two weeks later the two sides settled.

The three-year contract between the International Longshore and Warehouse Union and the shippers' association covers all major Pacific ports, from San Diego to Seattle. Last year, longshoremen handled $260 billion in cargo, according to the association.

There are only 57 members of the longshoremen working in San Diego, although an unspecified number of "casual" workers build that work force when needed, a union spokesman said.

Negotiations have stalled over benefits and how to bring new cargo- handling technology to the ports, according to both sides.

Shippers say they need to automate the ports to compete more efficiently in the global economy.

Union leaders say they're not against modernization – as long as new technology doesn't take the place of manpower.

Union officials also say shippers are trying to cut their health benefits and gut the grievance process. Shippers say their offers keep the union's health package the envy of the working class.

Wages are also at issue. A longshoreman's $80,000 average annual salary for full-time dock work rises to a $167,000 average for the most experienced foremen.

West Coast docks saw strikes in 1934, 1936-37, 1948 and 1971.

secession plans of the San Fernando Valley and Hollywood would end up on the cutting room floor, a Los Angeles Times poll found Tuesday.

Under rules governing the proposed breakups, a majority vote is necessary from citywide residents and residents in the area trying to split.

Valley residents support secession 52 percent to 37 percent. Only 38 percent of voters citywide favor a breakup, with 47 percent opposed.

Regarding Hollywood, 59 percent of voters citywide were opposed to letting go of an icon, and 25 percent were in favor, the poll found.

The telephone survey of 1,291 registered voters, 576 of them Valley residents and 120 of them Hollywood residents, was taken June 20-28. The overall margin of error is 3 percentage points. The margin for Valley voters is 3 percentage points, while the margin for Hollywood voters is 9 percent.

Sixty-two percent of those surveyed were happy living in the nation's second-largest city, the poll found. Just 33 percent were unsatisfied.

Although public opinion on secession is divided mainly by geography, the poll also found splits along other demographic lines.

Secession's strongest supporters live in the Valley and are white, affluent, Republican, self-described conservatives or moderates. Most secession backers have lived in the Valley for at least 10 years, the poll found.

The staunchest opponents live outside the Valley and are liberals, Democrats, Jews and blacks.

``It's clear that the decision will be built around some of the dividing lines we're already pretty familiar with in L.A., which is race, place and ideology,'' said political scientist Raphael Sonenshein of California State University, Fullerton.

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San Diego housing market in 'bubble,' consultant says

by Lew Sichelman San Diego Union Tribune

SAN FRANCISCO – Housing prices in San Diego have increased to a level that cannot be sustained, according to a new economic yardstick designed to help builders, lenders and investors determine which housing markets are overheated and in danger of collapsing.

Among 44 urban areas studied, the San Diego metropolitan area's home prices were found to be the second-highest in relation to the income of residents, according to an index introduced last week at the Pacific Coast Builders Conference.

That could signal dangerous territory, said Irvine real estate consultant John Burns, who developed the Housing Cycle Barometer index, which will be issued quarterly.

He said it indicates that a price correction may be in the offing because local incomes are not keeping up with escalating home prices.

"The reason you got to this situation is because of a lack of supply," Burns said. "Prices have risen a lot and you can't appreciate at 10 percent a year forever."

Overall, on a scale of 0 to 10, San Diego has a barometer reading of 7.8. Only Boston's is higher, at 9.3.

Fort Lauderdale, Fla., is third at 7.6, and San Francisco is a close fourth at 7.3.

Burns said that under his system, anything over 7.5 should be considered "a large housing bubble."

But he emphasized there are "no indications" of the San Diego bubble popping "any time soon."

Indeed, the consultant expects the run-up in home prices to continue.

He told builders at the conference not to be afraid to raise their prices. At the same time, though, he suggested that the price hikes cannot go on forever, and eventually the bubble will burst.

"It won't happen tomorrow; I hope it won't happen for a while," Burns said, noting that demographics, government emphasis on home ownership, constraints of new production and strong employment growth all will serve to stave off a price correction in the near term.

That was a sentiment shared by Gary Reime, immediate past president of the San Diego Association of Mortgage Brokers. Reime is also a vice president of the California Association of Mortgage Brokers and owner of Five Star Mortgage.

"I don't know if I'd call it a bubble," said Reime, adding that any correction here would take place at least 18 to 24 months in the future. "There are new companies coming in, paying higher incomes, and new programs helping households get into a home."

Applications for new mortgages are still coming in at a frenetic rate, he said.

Still, Reime said, he has seen an increasing number of mortgage applicants come into his office planning to spend more than 40 percent of their incomes on housing costs – a phenomenon he describes as "a red flag."

In explaining his barometer, Burns warned that when the bubble pops, places with the greatest home price appreciation will take the longest to recover.

San Diego County certainly qualifies as one of those places.

For May, the last month for which figures are available, the overall median price for new and resale homes in the county soared to $315,000 – an increase of $51,000, or 19.3 percent, from the previous year, and $18,000, or 6 percent, from April, according to DataQuick Information Systems.

If prices stagnate or decline until incomes catch up, the downturn will be rather short-lived, Burns said. But if prices continue to appreciate to levels that force employers and residents to leave in search of less- expensive housing, the number of sellers will start to outnumber buyers and the bottom will fall out of the market.

Taken from a national view, the Irvine consultant's analysis is in line with most housing economists, who say that while there may be a few housing markets that are overheated, there is no price bubble across the nation.

Of the 44 markets surveyed by Burns, 24 are not overpriced, among them Riverside with a barometer reading of 4.1, Las Vegas with 3.8 and Salt Lake City with 3.5.

Only three – Boston, San Diego and Ft. Lauderdale – were extremely overpriced.

Burns found 14 other metro areas that are experiencing "small" housing bubbles. This group was led by San Francisco and included many California and Western markets, including San Jose, Orange County, Oakland, Sacramento and Los Angeles.

But it also included such relatively inexpensive places as Miami, Tampa and Charleston, S.C.

Burns said his benchmark tool is "not a measure of expensive housing markets, but rather a measure of which markets are expensive in comparison to their own history."

The barometer calculates two key ratios – one between home prices and income levels, and the other between annual mortgage payments and income levels. Then, the current ratio is compared with the mean ratio for the last 21 years in each area.

Burns said San Diego's current price-to-income ratio is not supported by the region's slow income growth, part of which can be attributed to the fact that the area is home to many retirees on fixed incomes.

In fact, the price-to-income ratio is so out of line that had the index been based solely on this calculation, San Diego would have rated a 10.

Burns also found that the average home buyer today must devote a whopping 43.1 percent of his or her household income to mortgage payments. By way of comparison, the 21-year mean payment-to- income ratio for San Diego was a much more affordable 23.8 percent.

The typical San Diego home buyer who bought a house in recent months is paying $21,108 a year to put a roof over his or her head, he said.

Still, the area's 7.8 rating on the housing price Richter scale could have been worse – and has been. If the barometer had existed in the early 1980s, it would have rated a 10.

Drawing 22,000 builders and allied professionals, the Pacific Coast Builders Conference is the nation's largest regional housing trade show.

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Economy deals blow to San Jose hotels

By Steve Johnson

San Jose Mercury News

Empty Rooms in San Jose and Santa Cruz:

Benson Lee, manager of the Crowne Plaza hotel in downtown San

Jose, can be excused for sounding a bit glum these days.

Lodging-industry profits dipped 19.4 percent in 2001 -- the worst plunge in more than six decades -- and among the hardest-hit are San Jose hotels that depend heavily on technology-related business travel.

The Crowne Plaza draws many of its customers from the San Jose McEnery Convention Center, one block away, where attendance over the past 12 months is down 15 percent from the previous year.

Lee has tried to lure travelers by lowering standard room rates from about $200 last year to $159 this year, but it has not helped much. Although the Crowne Plaza normally has at least 60 percent of its 239 rooms occupied this time of year, it averaged 45 percent full in June.

``We had a real rough month,'' Lee acknowledged. ``We are not doing too well.''

Lee has plenty of company. The hotel industry has been in a serious funk for more than a year because of the soured economy and the Sept. 11 terrorist attacks, which discouraged both business and leisure travel.

The falloff in hotel profits last year was the first decline in a decade, according to PKF Consulting, and the largest single-year drop since 1938. That year also saw economic and world events depress travel: The U.S. unemployment rate was at 19 percent in the midst of the Great Depression, and German dictator Adolf Hitler invaded Austria at the brink of World War II.

Bay Area hotels have been having an especially difficult time making money.

Nationally, the average revenue per hotel room fell about 9 percent from the first quarter of 2001 to the first quarter of this year, according to Smith Travel Research. But Bay Area hotels did much worse. Revenues over that period plummeted 24 percent at Oakland hotels, 30 percent in San Francisco and San Mateo, and 33 percent in San Jose and Santa Cruz.

``It is scary,'' said John Southwell, general manager of the Hilton San Jose & Towers, across the street from the Crowne Plaza in San Jose. ``It's a whole new world.''

Business travelers

A San Jose Convention & Visitors Bureau survey of 15 city hotels that book mainly business travelers found their room revenues for May were 36 percent lower than in May 2001 and nearly half what they had been in May 2000.

San Jose hotels draw relatively few tourists. So when businesses scaled back travel for meetings and conventions, those hotels did not have many other customers to turn to. In 2000, San Jose and Santa Cruz hotels were about 80 percent full, said Smith Travel Research. That rate dropped to 64 percent in 2001. For the first four months of this year, hotels averaged only 60 percent full.

Things could get even dicier, because several new hotels will open soon in the South Bay, adding to the competition for customers.

A 506-room Marriott is due to open next to the San Jose McEnery Convention Center in March, and construction is expected to start this year or next on a 254-room Courtyard by Marriott at Highway 87 and Santa Clara Street. And in Cupertino, the 224-room Cypress Hotel -- which features hand-painted ceilings and red mohair sofas -- plans to open Tuesday at DeAnza and Stevens Creek boulevards.

``We didn't foresee a recession or a serious setback for the high- tech industry,'' said Thomas LaTour, chairman of the San Francisco-based Kimpton Hotel & Restaurant Group, which owns the Cypress. ``So that is a little disappointing.''

No one is sure when the U.S. lodging industry, whose annual revenues exceed $100 billion, will bounce back. As LaTour put it, ``forecasting in this environment is treacherous, almost impossible.''

Some experts have predicted a rebound next year. But Christine Smith, general manager of the Maple Tree Inn, a 181-room operation on El Camino Real in Sunnyvale, is more pessimistic. ``I'm feeling, in this area, it's going to be like 2004.''

A positive outcome from the downturn for travelers is that some hotels have lowered room rates.

A few places -- including the Hilton San Jose & Towers and the newly expanded Fairmont San Jose -- have resisted cutting room prices. But many others have dropped theirs substantially -- a pleasant surprise to Nick Kohn, a 41-year-old furnace dealer and frequent traveler from Michigan who stayed recently at the Crowne Plaza.

``I thought it was a pretty good rate,'' said Kohn, who paid $115 for one night. That was about $45 less than what a preferred customer would have paid in the past.

Ripple effect

Empty rooms, however, hurt those who make a living off the travel trade. Business is down 15 percent so far this year at Frank & Ron Hotel-Motel Supply in Oakland, which provides the lodging industry with everything from tables and chairs to bathroom towels and air fresheners. Partner Bob Kalyan said business is the worst he has seen in 25 years.

Despite the empty rooms and some drastic cuts in room rates, most analysts say the hotel industry is in no peril. In fact, PricewaterhouseCoopers reported that because of cost-cutting at many hotels and motels after Sept. 11, hotel profits should increase this year and in 2003.

Moreover, while the average hotel's 2001 operating profit margin was 10 percent lower than the year before, it was still a relatively robust 29.4 percent, according to PKF Consulting, which specializes in hotel research.

``We're not seeing any signs of hotels dropping like flies,'' said Gary Carr, a PKF representative. And with leisure travel generally expected to increase this year over last, he added, ``it seems to be getting better all the time

Each week, the court of public opinion finds one more high-flying corporation or captain of industry to be guilty, greedy, reckless or all of the above. This week's poster child for bad behavior: WorldCom.

What's going on here? In some cases, a handful of corporate chieftains have lost their moral bearings. But in others, longstanding, companywide abuses of power may force investors to conclude that the corporate game itself is rigged and the watchdogs are absent.

In the past few months, the reported lootings have become so frequent, so spectacular, that the term ``business ethics'' is starting to sound like a cruel oxymoron. The swashbuckling CEO, the archetypal corporate hero in prosperous times, is now vilified as a crook, gambling the retirement savings of hapless workers. And the scorn doesn't stop at the boardroom door. USA Today ran a cover story this week about executives who cheat at golf, leading Sun Microsystems CEO Scott McNealy to muse, ``Aren't CEOs getting picked on enough these days?''

Indeed, ``leadership is taking a beating,'' said Silicon Valley business ethicist Kirk Hanson. Even Martha Stewart, the domestic goddess-turned-media-powerhouse, has been accused of homegrown cheating by allegedly unloading stock thanks to an insider tip.

This week the psychic stock of corporate America fell to a new low when WorldCom, the long-distance giant, said it had lied about how it counted $3.85 billion over five quarters. The company is laying off 17,000, faces bankruptcy, criminal charges and congressional hearings.

And Xerox, which said it overstated earnings by about $3 billion, now will have to restate that restatement. Three billion? Try $6 billion.

Even some supporting actors are in hot water. Through the boom, some analysts publicly touted stocks while privately deriding the same investments as ``dogs.''

Boom economies can obscure a lot of funny numbers. It's almost a given that as long as a company keeps growing, few investors care to look too closely at exactly why. It's in a down cycle that the sleight-of-hand becomes apparent and the placing of blame begins.

``What you can't predict ahead of time are the kinds of problems that will be revealed,'' said Nell Minow, editor of the Corporate Library (www.thecorporatelibrary.com). ``It's been a convenient fiction for a long time that we had checks and balances in place. When accountants say `we weren't here to find out fraud,' and analysts say `we weren't here to tell you what we really think' and the board of directors says `we weren't really here,' you have a problem on your hands.''

For corporate watchdogs such as Minow, it's often a single dubious disclosure that prompts a harder look at a troubled company. Take, for example, Bernard Ebbers, the former chief executive of WorldCom. Even before WorldCom's mea culpa this week, industry observers wondered if the company had lost its way. When Ebbers resigned in April, he admitted he owed the company $408 million for a loan the company made to him to cover his highly leveraged position in the company's stock.

The loan was a ``sign that people were getting away with completely inappropriate behavior,'' said Roger McNamee, a partner with Integral Capital Partners, a Silicon Valley investment firm.

Of course, greed is nothing new. Every era has its pirates. And their punishment often entails a re-examination of the rules governing business.

``In each case, there was outrage and shock,'' said Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.

In most cases there was an attempt to legislate the problem away. At the turn of the 20th century, abuses of power by Andrew Carnegie and John Rockefeller led to antitrust laws. After the stock market crash of 1929, the government enacted market reforms that included the formation of the Securities and Exchange Commission to help protect investors.

And from 1975 to 1978, hundreds of companies were accused of bribery around the world. The scandal led to the creation of the 1978 Foreign Corrupt Practices Act. More important, perhaps, it spurred business schools to begin teaching ethics. That year, Hanson became one of the first business ethics professors in the country, teaching at Stanford University.

The present era's most notable train wrecks include five alleged accounting scandals (WorldCom, Enron, Adelphia, Dynegy, Qwest), one alleged insider trading (ImClone) and an alleged tax fraud (Tyco International).

In Tyco's case, the alleged actions of an individual invited scrutiny of the company, as well. L. Dennis Kozlowski, the former chief executive, is charged with failure to pay more than $1 million in sales taxes on artwork. And now Tyco is under investigation for hiding payments to executives.

But some of the bigger scandals are company-killers and raise questions about systemic problems that are far deeper than the misdeeds of a few. ``It's not like suddenly we're getting unethical individuals and you can explain it away as personalities,'' said Douglas Porpora, who teaches a class on wealth and power at Drexel University.

Enron's scandal involves allegations of questionable outside partnerships that kept billions of dollars in losses off the energy company's books. It led to the conviction of Arthur Andersen, the company's accounting firm, for obstruction of justice and raised questions about whether the company's board -- and all corporate boards -- pay enough attention or just rubber stamp whatever the chief executive wants.

``Why is this happening?'' asked James Cramer, a markets commentator and founder of TheStreet.com. ``People hate to let people down. People think things will get better. Over the course of the last 20 years, things did get better if you just rode it out and hid things you got away with it.

The long boom gave executives an inflated sense of competency and self-worth. Hypergrowth spawned an aura of invincibility, said the Rev. John H. Huntington, an Episcopal priest who ministers to Silicon Valley executives. ``There are people who are standing in line who want to flatter you and ask you questions because you are in leadership,'' said Huntington, who was CEO of an aerospace firm before entering the priesthood. ``To the hubris add greed. We have no built-in way of knowing that we have enough. And a trajectory of hubris and greed has led to the outright fraud against the investor.''

So what to do with CEOs behaving badly? As in earlier eras, outrageous behavior is being greeted by calls for sweeping reform -- of everything from the accounting industry, to corporate governance to executive compensation. Boards are already under pressure to do more.

``It is greed unlimited,'' said Ralph Nader, the Green Party activist who ran for president in 2000. ``You have to have law and order. You have to have institutional restraints on greed.''

Cramer believes the present scandals are fundamentally different from those that came before and demand a fundamentally different response.

``WorldCom is like a rogue company,'' Cramer said. ``We never had rogue companies before. What was the penalty before now? A lot of golf?''

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Economists at eight of Wall Street's big bond firms now predict the Federal Reserve will wait until next year to raise interest rates, twice as many as made that forecast a week ago.

Expectations that slumping stocks may temper an economic rebound prompted economists at Dresdner Kleinwort Wasserstein Securities LLC, HSBC Securities USA Inc., Lehman Brothers Inc., Mizuho Securities USA Inc. and Nomura Securities International Inc. to join three other dealers that trade directly with the Fed in saying the central bank would leave its benchmark rate at 1.75 percent until at least January.

Economists have become more pessimistic about the economy as the Standard & Poor's 500 Index has tumbled in 12 of the past 15 weeks, losing 15 percent of its value. WorldCom Inc.'s announcement it inflated profits by hiding expenses heightened concern more companies will disclose accounting irregularities, undermining consumer confidence.

"The Fed can't do anything but wait," said Kevin Logan, chief market economist at Dresdner Kleinwort Wasserstein Securities LLC.

As recently as last week, Logan predicted the Fed would raise its target for overnight loans between banks a quarter point in September and had forecast a 75 basis-point increase by the end of the year. Lehman economist Stephen Slifer, who earlier this month said the Fed would raise rates in November, now predicts the central bank will hold fast until March. A basis point is 0.01 percentage point.

One week ago, economists at just three of the 22 so-called primary dealers said the central bank would wait until next year to raise the federal funds target: Citigroup Inc.'s Salomon Smith Barney, CIBC World Markets Inc. and Credit Suisse First Boston. Eleven days before that, only CIBC said so, while last month, none forecast such a scenario.

"The decline in stocks in past weeks has really changed the perception of the potential for a pick-up in business spending during the second half of the year," said Eric Green, a senior economist at BNP Paribas, who expects the Fed to wait until December to boost rates. "The Fed can't raise rates and risk choking off the recovery."

Many investors fleeing stocks sought the safety of the U.S. Treasury market, helping drive the yield on the two-year note, the most actively traded government security, down for six consecutive weeks to a five-month low of 2.81 percent on Friday (6/28/02).

The majority of economists surveyed expect the U.S. central bank to enact the first rate increase since May 2000 before the end of the year. Ten of those, including Bruce Steinberg at Merrill Lynch & Co., said the Fed's first interest-rate increase would come at the Nov. 6 meeting. Last week, Steinberg predicted the Fed would act in September.

"Clearly, the unsettled market conditions are going to postpone any movement," Steinberg said. "With the S&P 500 under 1000, the sign from the market is, 'Don't do a thing.'"

Tame inflation gives the Fed time to wait for a pickup in business spending before raising rates, economists said. Consumer prices rose 1.2 percent in the 12 months through May, down from a 3.6 percent increase in the year-earlier period.

Friday's Labor Department report will probably show the jobless rate rose to 5.9 percent in June from 5.8 percent in the previous month, according to a separate Bloomberg survey of economists. Still, that's down from 6 percent in April.

"Job creation is still somewhat sluggish, and is probably not enough to absorb all those people who have been laid off," said Conrad DeQuadros, a economist at Bear, Stearns & Co. "The unemployment rate may rise further, and the Fed won't raise rates when that happens."

Actually, it doesn’t feel too “happy,” but we will raise the flag, have a hot dog

each other’s company. Then we sedate the dog with a pill from the veterinarian as the fireworks really up-set our 12-year-old black Labrador. We will dinner and spend the evening at a good friends house with some other close friends, who allow us to bring “ Sammy.” Sue would never leave her at home while the fire crackers go off all around.

While I am very much looking forward to the fourth, I must admit it doesn’t feel like a celebration time with all the news of corporate corruption from Worldcom to Enron to even Martha Stewart. However, these business scandals are nothing new in American History.

When I write the e-mail signature with “This Day in American History,
there are mentions of political, business, and personal corruption, the

In the later half of the 19^th century, meat from the United States had so many health problems, Europeans put a ban on importing it from us, until we established standards and enforcements. But it only applied to meat shipped out of the United States. It was not until the next century that the same standards were required for meat sold in

Keating. He did serve five years before his conviction was overturned. Reportedly

Hopefully if you read the “Day in American History,” you remember some of the

While Keating and Fanghella and Kozolowski (perhaps he is a man of the “Gilded

Age” with his paintings, expensive apartments, and trappings) threw expensive parties, this was nothing new to thee "Gilded Age," every man was a potential Andrew Carnegie, and Americans who achieved wealth celebrated it as never before. In New York, the opera, the theatre, and lavish parties consumed the ruling class' leisure hours. Sherry's Restaurant hosted formal horseback dinners for the New York Riding Club. Mrs. Stuyvesant Fish once threw a dinner party to honor her dog who arrived sporting a $15,000 diamond collar.

While the rich wore diamonds, many during this period wore rags. In 1890, 11 million of the nation's 12 million families earned less than $1200 per year; of this group, the average annual income was $380, well below the poverty line. Rural Americans and new immigrants crowded into urban areas. Tenements spread across city landscapes, teeming with crime and filth. Americans had sewing machines, phonographs, skyscrapers, and even electric lights, yet most people labored in the shadow of poverty. Today they have television sets, computers, portable telephones, and at least two cars per family, and are much better educated).

To those who worked in Carnegie's mills and in the nation's factories and sweatshops, the lives of the millionaires seemed immodest indeed. An economist in 1879 noted "a widespread feeling of unrest and brooding revolution." Violent strikes and riots wracked the nation through the turn of the century. The middle class whispered fearfully of "carnivals of revenge."

For immediate relief, the urban poor often turned to political machines. During the first years of the Gilded Age, Boss Tweed's Tammany Hall provided more services to the poor than any city government before it, although far more money went into Tweed's own pocket. Corruption extended to the highest levels of government. During Ulysses S. Grant's presidency, the president and his cabinet were implicated in the Credit Mobilier, the Gold Conspiracy, the Whiskey Ring, and the notorious Salary Grab.

Europeans were aghast. America may have had money and factories, they felt, but it lacked sophistication. When French prime minister Georges Clemenceau visited, he said the nation had gone from a stage of barbarism to one of decadence -- without achieving any civilization between the two.

The 15-year fixed-rate mortgage averaged 6.10 percent, down from 6.18 percent last week. One year ago, it was at 6.67 percent.

their employees to take this time off as vacation time or “no pay” time. Most likely it will mean July will be a slow business month. Normally it is August.

Anderson Forecast, compared the current recession/recovery to the nine previous recession/recoveries since 1950. Picking up on a theme first introduced in the March report, Edward E. Leamer, director of the UCLA Anderson Forecast, asserted that the nation is in the midst of the first "business cycle." The previous nine cycles have been "consumer cycles" driven by downs and ups of consumer spending, particularly on housing and cars. The recession of 2001 was caused by reductions in business spending. Consumers, however, continue to spend on housing and cars. We in the leasing business knew this, as capital equipment spending was down, whether leased or purchased outright.

Consumers "are buying homes and cars and shirts and shoes with a religious intensity suited to a celebration of the genuine arrival of the Nirvana Economy," Leamer said. However, all on credit or refinanced homes.

In a special report titled "Health Care and The Economy: Train or Drain?," author Christopher Thornberg, senior economist with the UCLA Anderson Forecast, addressed whether the health-care industry has served as a "drain," weakening an already soft economic recovery or whether it is actually the next "train," leading the world in cutting-edge technological breakthroughs, making life both longer and more pleasant for Americans

In a report titled "California at Midyear: Recession Ending in North, Expansion Proceeding in South," Senior Economist Tom Lieser in fact sees an end to the recession in the Bay Area and a continuation of the economic expansion of Southern California — which never dipped into recession this time around — and thus an end to the statewide recession. Unfortunately this was before Nasdaq

While everyone may have their “signs of the time,” mine have always been “for

I have never seen so many “for rent” signs since I have been in Santa Clara, since